Terminology
21.1. Definitions.
The terms used in this Circular are defined as follows:
Accounts payable.--Amounts owed by an account on the basis of
invoices or other evidence of receipt of goods and services, i.e., the
amount of goods and services received but not yet paid.
Accounts receivable.--Amounts receivable by an account from another
Federal Government account or the public (the latter only when a
provision of law specifies that such orders may be used as budget
authority) for goods furnished and services rendered. For
clarification on the amount available for obligation, see Parts III
and XI.
Administrative division of funds.--Any division or subdivision of an
appropriation or fund by an official having administrative control
over such appropriation or fund. Specifically:
1. Apportionment.--A distribution made by OMB of amounts available
for obligation in an appropriation or fund account into amounts
available for specified time periods, programs, activities, projects,
objects, or combinations thereof. The apportioned amount limits the
obligations that may be incurred.
2. Reapportionment.--A revision approved by OMB of a previous
apportionment for an appropriation or fund account.
3. Agency limitation.--For fund control purposes, an agency
limitation is any administrative division or subdivision of funds made
by agency officials that restricts the use of Government funds.
a. Allotment.--Authority delegated by the head or other authorized
employee of an agency to agency employees to incur obligations within
a specified amount, pursuant to OMB apportionment or reapportionment
action or other statutory authority making funds available for
obligation.
b. Allocation.--This term is used in two different ways:
--It is used restrictively to mean the amount of obligational
authority transferred from one agency, bureau, or account that is
set aside in a transfer appropriation account (also known as an
allocation account) to carry out the purposes of the parent
appropriation or fund. See also "Transfers".
--It is used broadly to include any subdivision below the
suballotment level, such as subdivisions made by the agency
financial plans or program operating plans, or other agency
restrictions.
Advances.--Amounts of money prepaid to a Federal government account
for the later receipt of goods, services, or other assets, or as
matching funds.
Agency.--For purposes of this Circular, the word "agency" is used to
designate any department, agency, commission, authority,
administration, board, or other independent establishment in the
Executive Branch of the Government, including any corporation wholly
or partly owned by the United States.
Apportionment.--See "Administrative division of funds".
Balances of budget authority.--This term refers to the cumulative
amount of budgetary resources provided to an account that has not been
outlayed (spent). More specifically, balances are referred to as:
1. Obligated balance.--The cumulative amount of obligations incurred
(as determined under 31 U.S.C. 1501) for which outlays have not yet
been made. It includes undelivered orders and amounts received but not
yet earned, less (a) collectible reimbursements receivable from other
Federal government accounts, (b) collectible refunds receivable from
other Federal government accounts, (c) unfilled orders on hand from
within the Federal government that constitute valid obligations of the
ordering account and for which reimbursements will be credited to the
account being reported, and (d) unfilled orders from outside the
Government for which an advance payment has been received and credited
to the account being reported.
2. Unobligated balance.--The unobligated balance is the amount
remaining after deducting the cumulative obligations from the amount
available for obligation.
3. Unexpended balance.--The unexpended balance is the sum of the
obligated and unobligated balances.
Budget authority.--Budget authority is the authority provided by law
to incur obligations that will result in outlays or expenditures.
Specific forms of budget authority are:
1. Appropriations, which are authority to incur obligations and make
expenditures, including the authority to obligate and expend
offsetting receipts and collections (other than borrowing authority),
that is provided in appropriations acts and other provisions of law.
Certain types of appropriations are not recorded as budget authority
to incur obligations. These are appropriations: (a) to liquidate
contract authority, (b) applied to the reduction of outstanding debt,
(c) for refunds of receipts, and (d) to liquidate deficiencies.
For purposes of the Antideficiency Act, the term "appropriations" is
defined as appropriations, funds, and authority to create obligations
by contract in advance of appropriations or any other authority making
funds available for obligation or expenditure.
2. Borrowing authority, which is authority granted to a Federal
entity to borrow (e.g., from Treasury or through the issuance of
promissory notes or monetary credits), and to obligate and expend the
borrowed funds.
3. Contract authority, which provides specific statutory authority
to incur obligations in anticipation of either receipts or an
appropriation of liquidating cash with which to pay the obligations.
The availability of budget authority for obligation and expenditure
may be limited by purpose, amount, or time.
1. Purpose. Funds may be obligated or expended only for the purposes
authorized in appropriations acts or other laws.
2. Amount. Obligations and expenditures may not exceed the amounts
established in law.
If the law itself specifies an amount of budget authority as
available, the amount is classified as definite authority. This type
of authority includes authority stated as "not to exceed" a specified
amount.
If the law does not specify an amount of budget authority as
available, rather the amount is determined by specified variable
factors, the amount is classified as indefinite authority. Examples
include an appropriation of all or part of the receipts from a certain
source or an appropriation of such sums as are necessary.
3. Time. The period during which funds may be obligated or expended
is limited by law.
Laws that provide budget authority may limit the period during which
the budget authority is available for incurring new obligations. Such
budget authority is referred to as fixed budget authority. Budget
authority that is available for new obligations for one fiscal year is
referred to as annual or fiscal year authority. Budget authority that
is available for new obligations for two or more fiscal years is
referred to as multi-year authority. Budget authority that is not
fixed is referred to as no-year authority.
Budget authority that is provided in annual appropriations acts is
annual authority unless the language providing the authority specifies
a longer period of availability for new obligations. This is because
the enacting clause of each annual appropriations act specifies that
the act is making appropriations for the fiscal year. In addition, a
permanent law specifies that amounts made available in appropriations
acts are available after the fiscal year covered by the law in which
it appears only if the law expressly makes it available for a longer
period of time {31 U.S.C. 1301(c)}. Moreover, many appropriations acts
contain a general provision specifying that the appropriations
provided in the act are not available beyond the current fiscal year
unless expressly so provided.
When budget authority is made available for new obligations for a
fixed period of time, it is usually available for adjustments or
expenditures (i.e., disbursements) only during the fixed period and
the five fiscal years following the end of the fixed period. After
this period, all unexpended balances are permanently cancelled. See
Part XI for instructions on procedures for closing accounts.
If the authority is not fixed, the authority usually is available
for adjustments and expenditures until the purposes for which the
amounts were provided are accomplished and there has been no
disbursement for two fiscal years.
During the period of time that the authority is available for new
obligations, it is referred to as unexpired authority. When the
authority to incur new obligations has expired but the authority to
pay valid obligations previously incurred, as well as valid
adjustments thereto still exists, it is referred to as expired
authority. When the authority to pay valid obligations or make
adjustments no longer exists, it is referred to as canceled authority.
Budgetary resources.--See Parts III, IV, and V.
Deferral.--Any executive action or inaction that temporarily
withholds, delays, or effectively precludes the obligation or
expenditure of budgetary resources. Pursuant to 31 U.S.C. 1512 and the
Impoundment Control Act {(2 U.S.C. 684(b)}, deferrals are permissible
(a) to provide for contingencies, (b) to achieve savings made possible
by or through changes in requirements or greater efficiency of
operations, or (c) as specifically provided by law. These programmatic
deferrals are generally effected through the apportionment process.
"Agency deferrals" are those initiated and effected by the agency
itself, and not reflected in the apportionments. See Part VII for
instructions on reports to Congress.
Disbursements.--Sometimes used interchangeably with the term
"outlays".
Expenditures.--Sometimes used interchangeably with the term
"outlays".
Feeder account.--Certain appropriation and revolving fund accounts
whose resources are available only for transfer to other specified
appropriation or revolving fund accounts.
Financing authority.--The authority provided by the Federal Credit
Reform Act of 1990 to finance the unsubsidized portion of direct loans
and loan guarantees. It is used only in credit financing accounts.
Fiscal year.--The Federal Government's yearly accounting period
begins on October 1 and ends on the following September 30. The fiscal
year is designated by the calendar year in which it ends, e.g., fiscal
year 1994 began on October 1, 1993, and ended on September 30, 1994.
Fund control regulations.--Agency rules specifying the procedures
that agency officials and employees are required to follow whenever
they obligate or expend Government funds.
Fund types.--The budget totals are comprised of two major fund
groups, Federal and trust.
Within each group there are several types of central accounts
established in the Treasury, as described below. The range of four
digit Treasury basic account symbols for each subgroup of central
accounts is provided in parentheses.
1. Federal funds. This group comprises all of the expenditure,
receipt, and fund accounts that are not designated by law as trust
funds.
a. General fund expenditure accounts (0000-3899) primarily record
appropriations and expenditures of general fund receipts.
b. General fund receipt accounts (0000-3800) record collections not
earmarked by law for a specific purpose, e.g., income and
corporate taxes, customs duties, and miscellaneous receipts.
c. Special fund expenditure accounts (5000-5999) record
appropriations and expenditures of special fund receipts.
d. Special fund receipt accounts (5000-5999) record collections that
are earmarked by law for a specific purpose and are not designated
as trust fund receipts, e.g., the Land and Water Conservation
Fund.
e. Public enterprise revolving fund accounts (4000-4499) record the
permanent appropriations and expenditures of collections,
primarily from outside the Government, that are earmarked to
finance a continuing cycle of business-type operations.
f. Intragovernmental revolving fund accounts (4500-4999) record the
permanent appropriations and expenditures of collections,
primarily from other agencies and accounts, that are earmarked to
finance a continuing cycle of business-type operations, e.g.,
working capital funds, industrial funds, stock funds and supply
funds.
g. Management fund accounts (3900-3999) record the permanent
appropriations and expenditures of collections from two or more
appropriations to carry out a common purpose or project not
involving a continuing cycle of business-type operations. These
accounts facilitate the administration and accounting for
intragovernmental activities.
2. Trust funds. This group is comprised of all the expenditure,
receipt, and fund accounts that are designated by law as trust funds.
a. Trust fund expenditure accounts (8000-8399 and 8500-8999) record
appropriations and expenditures of trust fund receipts.
b. Trust fund receipt accounts (8000-8999) record receipts earmarked
for specific purposes in accordance with a statute that designates
the funds as a trust fund, e.g., the Highway Trust Fund.
c. Trust revolving fund accounts (8400-8499) record the permanent
appropriation and expenditure of collections used to carry out a
cycle of business-type operations in accordance with a statute
that designates the fund as a trust fund, e.g., the Employees
Health Benefits Fund.
Treasury account identification codes. Each central account
established in the Treasury is identified by a code that consists of
seven or more alphanumeric characters, for example:
28 4 0230
20 4/6 0230
20 X 0230
The account codes provide the following information:
--Department or agency code. The first 2 digits identify the agency
responsible for the account. It is assigned by the Department of
the Treasury. For purposes of the Antideficiency Act, the Treasury
accounts apply. The accounts in the President's budget are usually
aggregations of Treasury accounts. The printed budget uses the 2
digit Treasury agency code. For puposes of data input for budget
formulation, see OMB Circular No. A-11 for the 3 digit department
or agency code assigned by OMB.
--Period of availability. The next character represents the period
of availability of the account for obligation.
o Annual accounts. A single digit (0 through 9) represents the
last digit of the fiscal year in which the appropriation is
available for obligation.
o Multiple-year accounts. Two digits separated by a slash (/)
indicate a multiple-year appropriation. The digit preceding the
slash represents the first fiscal year of availability and the
digit following the slash represents the last digit of the final
fiscal year of availability.
o No-year accounts. An "X" is used to designate a no-year
appropriation which is available for an indefinite period of
time.
--Treasury basic account symbol. The last four digits identify the
specific account by appropriation or fund group and are also known
as the four digit appropriation or fund group basic account
symbol.
Impoundment.--Any executive action or inaction that withholds,
delays, or precludes the obligation or expenditure of budget
authority. See "Deferral" and "Rescission".
Obligated balance.--See "Balances of budget authority".
Obligations incurred.--Amounts of orders placed, contracts awarded,
services received, and similar transactions during a given period that
will require payments during the same or a future period. Such amounts
will include outlays for which obligations had not been previously
recorded and will reflect adjustments for differences between
obligations previously recorded and actual outlays to liquidate those
obligations. See section 22 for a more detailed explanation of the
concept of obligations and section 23 for its application to specific
types of transactions.
Outlays.--Outlays are recorded when obligations are paid. The amount
of the outlay is the amount paid. Obligations are usually paid in the
form of cash (currency, checks, or electronic fund transfers).
However, obligations may be paid and outlays recorded even though no
cash is disbursed. For example, outlays are recorded for the full
amount of Federal employees' salaries, even though the cash disbursed
to the employee is net of Federal and state taxes, retirement
contributions, life and health insurance premiums, and other
deductions. Outlays are recorded when debt instruments (bonds,
debentures, notes, or monetary credits) are used to pay obligations.
For example, the acquisition of physical assets through certain types
of lease-purchase arrangements is treated as though an outlay were
made for an outright purchase. Because no cash is paid at that time to
the nominal owner of the asset, a debt is recorded. Lease payments in
such cases are recorded as repayments of principal and interest.
The treatment of interest varies. Outlays for the interest on the
public issues of Treasury debt securities are recorded as the interest
accrues, not when the cash is paid. Interest on special issues of the
debt securities held by trust funds and other Government accounts is
normally stated on a cash basis. In a few cases where a Government
account is invested in Treasury securities at a premium or discount
and the differences between the purchase price and par value are
significant in total, special treatment is required to amortize the
interest recorded.
For Federal credit programs, outlays for the subsidy cost of direct
loans and loan guarantees are recorded as the underlying loans are
disbursed.
Refunds of receipts (such as income taxes in excess of tax
liabilities) are recorded as reductions of receipts, rather than as
outlays.
Outlays during a fiscal year may be for payment of obligations
incurred in the same year or in prior years. Obligations, in turn, may
be incurred under budget authority provided in the same or in prior
years.
For budget execution purposes, the outlays of an account are stated
net of any offsetting collections credited to the account.
Reapportionment.--See "Administrative division of funds".
Reappropriations.--Amounts of budget authority resulting from
legislation to continue the availability of unobligated funds that
have expired or would otherwise expire. Any such extension of
availability constitute new budget authority in the fiscal year in
which the balances become newly available.
Recoveries of prior year obligations.--Amounts made available in
no-year and unexpired multiple-year accounts through downward
adjustments of prior year obligations.
Refunds.--Recoveries of erroneous or excess payments that are
credited to an appropriation or fund account.
Rescission.--Enacted legislation canceling budget authority
previously provided by law, prior to the time when the authority would
otherwise expire. See Part VII for detailed instructions on rescission
proposals by the President.
Reserves.--Portions of budgetary resources set aside by OMB, under
the Antideficiency Act (31 U.S.C. 1512) and the Impoundment Control
Act (2 U.S.C. 684), (a) to provide for contingencies, (b) to effect
savings made possible by or through changes in requirements or greater
efficiency of operations, or (c) as specifically provided by law. On
the forms prescribed by this Circular, "reserves" will be classified
and shown as either "withheld pending rescission" or "deferred".
Reserves to provide for contingencies will not be proposed for
rescissions.
Revolving funds.--See "Fund types".
Statutory limitation.--For fund control purposes, a statutory
limitation is a restriction that establishes the maximum amount that
may be obligated or expended from that appropriation or fund. It
includes statutory credit limitations.
Transfers.--Shifting budgetary resources from one Federal government
account to another. See Exhibit 21 and Part VIII.
Warrants.--Official documents issued pursuant to law by the
Secretary of the Treasury that establish the amount of moneys
authorized to be withdrawn from the central accounts maintained by the
Treasury.
Undelivered orders.--The amount of goods and services ordered by an
account from another Federal Government account or the public but not
yet received, i.e., the amount of orders for goods and services
outstanding for which the liability has not yet accrued. This amount
includes any orders for goods or services for which delivery or
performance has not yet occurred. For purposes of the Circular, small
items of prepaid expense (e.g., subscriptions to periodicals) may be
omitted from the reports on undelivered orders.
Write-off.--The amount representing uncollectible receivables. (See
section 85.2.)
Unobligated balances.--See "Balances of budget authority".
Unfilled customers orders.--The amount of orders received from other
accounts within the Government for goods and services to be furnished
on a reimbursable basis. In the case of transactions with public,
report orders up to the amount collected (advances received) for which
the account or fund has not yet performed the service or incurred its
own obligations for the purpose.
Concept of Obligations
22.1. General concept.
Obligations incurred are defined in section 21 to include amounts of
orders placed, contracts awarded, services received, and similar
transactions during a given period that will require payments during
the same or a future period.
In addition to orders and contracts for future performance,
obligations incurred include: (a) the value of goods and services
accepted and other liabilities arising against the appropriation or
fund without a formal order, and (b) outlays made for which
obligations were not previously reported. Except as specifically
provided herein, the concept of obligations excludes unfunded
contingent liabilities.
Pursuant to 31 U.S.C. 1501, no amount shall be reported as an
obligation unless supported by documentary evidence of transactions
authorized by law, such as: a binding agreement in writing, a valid
loan agreement, an order, a grant or subsidy, a liability resulting
from pending litigation, employment, expenses of travel and public
utilities, or any other legal liability of the United States. Further,
certifications and records shall be kept in an agency in a form that
makes audits and reconciliations easy (31 U.S.C. 1108).
Before funds expire, agencies should review estimated obligations to
assure that obligations are not understated due to a delay in
documentation. There must be adequate funds to cover upward
adjustments in expired accounts to avoid a violation of the
Antideficiency Act.
Moreover, agencies should ensure that obligations are not overstated
by the inclusion of obligations that are not likely to require
payment. In seeking to recover obligations that are not likely to
require payment, agencies should:
--Review obligations for goods and services ordered, cancel orders
or contracts for goods or services that are no longer needed or
that are not likely to be delivered, and deobligate the
appropriate amounts.
--Review obligations for goods received but not yet paid, return
goods that are no longer needed, and recover the amounts
obligated.
Likewise, accounts receivable from other Federal government accounts
should be reviewed periodically to determine their validity and
appropriate write-off procedures should be followed on uncollectible
amounts.
Application of the Concept of Obligations
23.1. General.
The application of the concept of obligations to various types of
transactions is outlined below. Except in those cases where there are
special statutory provisions to the contrary, reports on obligations
under this Circular will conform with the guidelines listed below.
The principles that are used in determining which fiscal year's
appropriation is to be charged at the end of the fiscal year will also
be used for the determination of the obligations for any period within
the fiscal year, unless otherwise specified.
23.2. Personal services and benefits.
As a general rule, include amounts earned. For example:
--Amounts earned by employees and others during the reporting
period.
--Charges based on salaries and wages (such as living and quarters
allowances, equalization allowances under 5 U.S.C. 3373, and the
employer's share of contributions to the retirement fund, premiums
for insurance, such as health and life insurance, and FICA taxes)
are obligations at the time the salaries and wages are earned.
--Severance pay will be reported as an obligation of the pay period
covered, on a pay period by pay period basis, as it is earned.
Personnel benefits in the form of authorized reimbursable expenses
estimated to be paid to employees for real estate, temporary
subsistence, and other expenses incident to dislocation at the request
of the Government will be reported as an obligation at the time
individual travel orders are approved. The reason is that the costs
are a bona fide need of the agency at the time the travel order is
approved and the Government has a statutory duty to reimburse the
employee. See section 23.3 for parallel treatment of travel and
transportation expenses incident to dislocation at the request of the
Government.
Other allowances (such as uniform allowances and incentive awards)
will be reported as an obligation when they become payable to the
employee.
Annual leave is not generally funded and will not be reported as an
obligation until it becomes due and payable as terminal leave or taken
in lieu of a lump sum payment. However, some revolving funds are
required to recover the cost of annual leave through fees. Therefore,
when transfers are made between such revolving funds, budgetary
resources in the amount of any funded annual leave must be transferred
along with the people. Transfers of people from revolving funds to
non-revolving funds must also be accompanied by transfers of budgetary
resources in the amount of any funded annual leave but the resources
must be credited to miscellaneous receipts.
For unemployment compensation payments to the Department of Labor
for former Federal employees, obligations should be reported when the
agency receives the bills rendered by Labor.
23.3. Travel and transportation.
As a general rule, include amounts for travel and transportation
that are needed during the reporting period and (a) for which a valid
contract for services has been made, or (b) for which travel and
transportation expenses have been incurred. A valid contract for
services is a binding agreement for specific services. Transportation
requisitions, Government bills of lading and shipping orders are not
binding agreements for specific goods or services.
Obligations may, where practicable, be tentatively recorded for
transactions within the year, provided that agencies place them on an
actual basis at the end of the fiscal year (except those transactions
specifically exempted by a provision of law).
Travel and transportation expenses incident to dislocation at the
request of the Government will be reported as an obligation on the
basis of individual travel orders. The same reasons, specified in
section 23.2 for the treatment of personal benefits incident to
dislocation at the request of the Government, apply.
23.4. Rent, communications, and utilities.
Include amounts for services received or amounts owed for the use of
property during the reporting period. In those cases where bills are
rendered for a period beginning in one month and ending in the
following month, the services received subsequent to the latest
billing date need not be included. However, if the accrued liability
for communication and utility services performed for the portion of
the month between the end of the billing period and the end of the
month is material, provision should be made for recording it as an
obligation. In the case of postage, include the cost of stamps
purchased and the amount owed for metered or penalty mail dispatched
during the reporting period. (Note: Penalty mail is government mail
that specifies that there will be a fine or penalty if used for
personal purposes.)
Generally, for contracts involving recurring services within or
beyond the fiscal year (such as rent), the contract will cover only
the period funded and obligations will be recorded for the full amount
of the contract for these services. For example, the annual amount
will be recorded as an obligation for a contract funded by an annual
account and the full amount for a two-year contract when funded by a
two-year appropriation. (NOTE: It is a violation of the Antideficiency
Act (31 U.S.C. 1341(a)) to involve the Federal Government in a
contract or obligation for payment of money before an appropriation is
made, unless authorized by law.)
In the case of GSA rental space, include payments owed (both earned
and advanced) on the basis of bills rendered by GSA pursuant to
regulation.
For contracts with renewal options, include the amount required to
cover the basic period and any penalty charges for failure to exercise
options.
23.5. Printing and reproduction, other contractual services, supplies
and materials, and equipment.
Include orders placed and contracts awarded. Documentary evidence of
binding agreements, orders, or other legal liabilities is required
before an amount may be recorded and reported as an obligation (31
U.S.C. 1501).
In reporting orders for supplies and services, agencies should bear
in mind that the general rule for lawfully obligating a fiscal year
appropriation is that the supplies or services ordered are intended to
meet a bona fide need of the fiscal year in which the need arises or
to replace stock used in that fiscal year.
Administrative commitments in the form of requisitions within an
agency, invitations for bids, or any other action short of a binding
contract, order, or other similar agreement (such as amounts
identified for contemplated procurement), will not be included in the
amounts reported as obligations.
With regard to specific types of contracts and orders, the following
procedures will be observed:
(1) Cost-plus-fee and other types of contracts without a fixed
price.--Include obligations on the basis of the total estimated costs
of contracts (including the total fixed fee, if any). This figure will
be reported for the month during which the contract is let, and
subsequent adjustments upward or downward in the estimated cost (or
the fixed fee, if any) will be reflected in subsequent reports. If a
maximum price is stated, the maximum amount will be reported at the
time the contract is let.
(2) Fixed price contracts with escalation, price redetermination,
and incentive provisions.--Report the fixed price stated in the
contract or the target or billing price in the case of a contract with
an incentive clause.
(3) Continuing contracts subject to the availability of
appropriations.--Report as an obligation the Government's total
estimated legal liability, for example, the amount that the contractor
has been notified is available for payment under the particular
contract and any potential Federal government cancellation costs. The
reported amount should be modified based on any subsequent agreements.
(4) Letters of intent and letter contracts.--Where such letters
constitute binding agreements under which the contractor is authorized
to proceed, obligations will cover the maximum liability indicated in
the letters. If the letters merely indicate an intention on the part
of the Government to enter into a contractual relationship at a later
date, then the amounts will not be treated as obligations. The maximum
liability under a letter of intent or a letter contract shall be the
amount necessary to cover expenses that the contractor is authorized
to incur prior to the execution of a definitive contract.
(5) Contracts for variable quantities.--Where a contract mentions
several quantities as alternatives, report only the amount for the
quantity specified for delivery, exclusive of permitted variations. In
the case of contracts that provide for delivery only when and if
requested by the Government, where the Government assumes no specific
obligation, only orders for delivery will be reported.
(6) Purchase orders.--Include orders, under which the Government
assumes a specific obligation for material or services not reflected
in the items described above.
(7) Orders required by law to be placed with another Government
agency.--When an agency is required by law or regulation to place
certain orders with another Government agency, such orders are
recorded as obligations of the ordering agency at the time the order
is issued. This includes orders placed with the General Services
Administration by agencies with limited exemption from procurement
under the Federal Property and Administrative Services Act of 1949, as
amended.
(8) Orders involving deliveries of stock from other appropriations
or funds.--The inclusion of an amount as an obligation where an order
is placed for deliveries of stock from other appropriations or funds
(other than those covered by paragraph (7) above) depends largely upon
the capacity in which the supplying activity functions with respect to
the particular transaction: (a) where an order involves common-use
standard stock items that the supplying activity has on hand or on
order for prompt delivery at published prices, the obligation is
incurred at the time the order is placed by the requisitioning
activity; (b) where an order involves stock items (other than those
covered by (a) above), the obligation is incurred by the
requisitioning activity at the time of issuance of a formal
notification from the supplying activity that such items are on hand
or on order and will be released for prompt delivery; and (c) where
the order involves execution of a specific contract, the obligation is
incurred by the requisitioning activity at the time the contract is
entered into by the supplying activity. Agencies may elect to record
the obligations for such orders at the time the order is placed with
the supplying activity. In such cases, however, adjustments must be
made at the end of the year to conform with the application prescribed
herein.
(9) Other intragovernmental orders.--Include orders placed and
accepted under the project order law (41 U.S.C. 23), pursuant to the
Economy Act (31 U.S.C. 1535), and similar legislation.
It should be noted that amounts obligated pursuant to orders under
the Economy Act are available for obligation by the receiving agency
only for the same period as the ordering account.
In addition, the Antideficiency Act prohibits overexpenditure of
funds as well as overobligation. This means that obligations may be
incurred against intragovernmental receivables but not to disburse
into a negative position. Such obligations are tolerated only where
the agency's cash control system will prevent over-disbursement.
Furthermore, it is the preferred practice, for the ordering agency,
whenever practicable, to advance cash to the performing ageny at or
before the time of ordering goods or services. This is extremely
important in those cases where the performing agency does not have
sufficient working capital to pay bills in anticipation of
reimbursement.
23.6. Lands and structures.
Include contracts entered into in procuring land and interest in
land, buildings and other structures, additions to buildings,
nonstructural improvements, and fixed equipment. In the case of
condemnation proceedings, include an estimated amount for the price of
the land at the time the Attorney General is requested to start
proceedings, adjusted to the amount of the payment to be held in
escrow where there is a declaration of taking.
For lease-purchases and capital leases covered by the scorekeeping
rules developed under the Budget Enforcement Act, obligations will be
reported, as follows. When the Federal government enters into the
contract, obligations will be recorded in the amount of the present
value of the lease payments discounted using the Treasury interest
rate used in calculating the budget authority provided for the
purchase. During the lease period, report obligations equal to the
imputed interest costs (i.e., the financing costs Treasury would have
incurred if it had issued the debt to acquire the asset).
23.7. Grants and taxes payable to State and local governments.
Unless otherwise required by law, the amount of obligations to be
included for Federal grant-in-aid programs, and taxes payable to
States and political subdivisions will be determined as follows:
(1) For grants that involve no administrative determination and are
automatically fixed by a statutory formula or specified by law, the
obligation will be:
--the amount determined by the application of the formula or the
amount appropriated, whichever is smaller; and
--reported at the time the amount so determined becomes available to
the grantee.
(2) For grants based upon approved financial programs, obligations
to be reported will cover only the period of time for which the
financial requirements have been established and approved, and for
which it has been administratively determined that funds will be paid
to grantees. For example, if requirements have been established and
approved for one month, and it has been determined that payment will
be made on the basis of such approval, obligations will be based on
the requirements for that month.
(3) For grants based upon approved construction and related
projects, the Federal share of the project will be considered to be
obligated at the time the project is approved by the appropriate
Federal authority.
(4) For any other grants involving administrative determination,
obligations will cover the amount approved for payment at the time the
determination is made.
(5) Payments in lieu of taxes will be reported as obligations at the
time the taxes would be due.
(6) Taxes and assessments based on property valuation will be
reported as an obligation at the time payment is due, unless further
action by the Congress is necessary to authorize payment. For
revolving funds and other cases specifically authorized by law, taxes
will be recorded as they accrue.
Obligations for grants administered through the letter-of-credit
financing mechanism will be determined on the same basis as outlined
above. Since drawdowns on letters of credit are not ordinarily
coincident with the incurring of obligations, it is imperative that
obligations be duly recorded prior to such drawdowns.
Under either the automatic grants or those based on administrative
determinations, the fact that recipient agencies are required to match
Federal contributions does not affect the Government's obligation.
However, in any case where an agency determines that future payments
on an approved program should be modified or discontinued, the
obligation previously reported will be adjusted accordingly.
23.8. Other grants, subsidies, and contributions.
The amount of obligations for grants, subsidies, and contributions
other than those referred to above, will be determined as follows:
(1) Amounts based upon contracts or agreements will be recorded at
the time the contract or agreement is entered into. For direct loan
programs covered by the Federal Credit Reform Act of 1990, the subsidy
cost will be obligated in the credit program account when the direct
loan obligation is incurred in the credit financing account. For
guaranteed loan programs, the subsidy cost will be obligated in the
credit program account when the loan guarantee commitment is made.
(2) Amounts to be paid in accordance with treaties will be recorded
at the beginning of the period for which the money is appropriated.
(3) All other grants, subsidies, and contributions will be recorded
at the time the payment is made.
23.9. Pensions, annuities, insurance claims, refunds, awards, and
indemnities.
Include amounts determined administratively or judicially to be due
and payable when no further action is required by law to authorize
payment.
23.10. Interest and dividends.
Include the amount of interest owed or dividends declared (other
than dividends payable from a Government-owed fund to the Treasury)
during the reporting period.
23.11. Investments.
Include purchases of securities and other investments made during
the period (see Part VIII for the treatment of U.S. Government
securities).
23.12. Guarantees.
Include the amount of each valid claim at the time the claim is
determined to be payable.