General Requirements

31.1. Accounting and internal control systems.

  As specified in 31 U.S.C. 3512, the head of each agency shall
establish and maintain systems of accounting and internal controls
that provide reliable accounting for the activities of the agencies.
These systems will provide the basis for preparing and supporting the
budget requests of the agency; for providing financial information the
President requires in formulating the budget; and for executing the
budget. These systems will also provide reasonable assurance that
transactions are properly recorded and accounted for to permit the
preparation of reliable financial reports and to maintain
accountability over assets; that funds, property, and other assets are
safeguarded against loss from unauthorized use or disposition; and
that transactions, including those related to obligations and costs,
are executed in compliance with laws and regulations.

  For the purposes of budget formulation and execution, the agency
systems of accounting and internal controls shall provide information
on actual obligations, outlays, and budgetary resources. Agencies will
use the standard general ledger account balances as the principal
source of information and establish controls consistent with financial
plans.

31.2. Definitions.

  Part II of this Circular contains the definitions of the technical
terms used in this part.

  For the purposes of this Circular, the terms "system of
administrative control of funds," "administrative control of funds
system," "fund control system," and "fund control regulation" are used
interchangeably.

31.3. Fund control regulations.

  31 U.S.C. 1514 requires the head of each agency, subject to approval
of the President, to prescribe by regulation a system of
administrative control of funds. The approval of fund control
regulations has been delegated to the Director of OMB. OMB approval is
intended to ensure that the objectives of financial plans are met.

  The fund control regulation will be a part of the agency's internal
control system. It may include provisions for allotments and other
administrative subdivisions of budgetary resources within the limits
of apportionments and will be designed to:

  (1) restrict both obligations and expenditures from each
appropriation to the lesser of:

  (a) the amount available in the appropriation or fund or

  (b) the amount of the apportionment or reapportionment of the
    appropriation or fund; and

  (2) enable the head of the agency to determine responsibility for an
obligation or expenditure exceeding an appropriation, apportionment or
reapportionment, allotment, and any other administrative subdivision
of funds.

  Allotment systems should be designed so that responsibility for
budget control is placed at the highest practical organizational level
consistent with effective and efficient management and control. For
example, a single allotment within the amount apportioned for each
appropriation or fund generally provides an appropriate basis for
control of a single category A or B apportionment, without further
allotting the funds. However, in some cases agencies will establish
other internal reporting systems below the allotment level that will
provide adequate data for monitoring the efficiency and economy with
which funds are used.

  The fund control regulation should distinguish administrative
subdivisions, the violation of which are automatically violations of
the Antideficiency Act, from classifications or subdivisions, the
violation of which are not automatically violations of the
Antideficiency Act.

  For budget execution purposes, agency fund control systems will be
fully supported by agency accounting systems. The timeframe covered by
an agency's fund control system will correspond to the agency's
financial plans. Where financial plans extend beyond the fiscal year
(e.g., construction, capital projects, multi-year grants), appropriate
control and accounting mechanisms will be incorporated into the
administrative control system.

31.4. Treatment of budgetary resources.

  For the purposes of budget execution, budgetary resources include:

  --new budget authority,

  --available unobligated balances at the beginning of the year,

  --reimbursements and other income (also known as offsetting
    collections credited to the appropriation or fund account), and

  --recoveries of prior year obligations.

  These amounts are presented on lines 1, 2, 3, 4 and 6 of the S.F.
132s, S.F. 133s, S.F. 142s, and S.F. 143s. The total budgetary
resources (line 7) are net of the enacted rescissions, transfers,
amounts not available pursuant to law, and amounts written off through
administrative action. For specific guidance related to credit program
requirements, see Part VI of this Circular.

  The system of apportionment provided in this Circular permits
inclusion of anticipated amounts of indefinite appropriations that do
not require further Congressional action (but not anticipated
additional appropriations not yet enacted), reimbursements and other
income, and recoveries in determining the amounts available for
apportionment even if these amounts are not available for obligation.
These anticipated amounts are presented on lines 1B, 3C, and 4B,
respectively, on the S.F. 132s and S.F. 133s. If, during the period of
apportionment, it is determined that material revisions need to be
made to such estimates, reapportionment requests should be submitted
(see section 44.4).

  The inclusion of anticipated amounts in determining the amounts
available for apportionment in no way authorizes an agency to obligate
or make expenditures in excess of the budgetary resources available
for obligation from such sources at the time the obligation or
expenditure is made. The amount apportioned for any appropriation or
fund account that includes anticipated amounts will not be allotted
unless there is reasonable assurance that such items will be collected
and deposited to the credit of the appropriation or fund that incurred
the obligation. The system of administrative control should,
therefore, be designed to keep obligations and expenditures from
exceeding apportionments and allotments or from exceeding budgetary
resources available for obligation, whichever is smaller.

  In the case of reimbursable work involving goods and services
provided to Federal Government accounts, budgetary resources available
for obligation from reimbursements are comprised of earned
reimbursements and unfilled customer's orders. An earned reimbursement
is the amount representing orders that have been filled. As with an
earned reimbursement, an unfilled order is available for obligation.
It is emphasized that there must be an order and a valid obligation
from the ordering account before such reimbursable work creates
budgetary resources available for obligation. For example, an advance
from a Federal Government account without an order does not constitute
budgetary resources available for obligation. Throughout the year
these amounts are adjusted to the extent that orders are filled,
cancelled, or new orders received.

  In the case of reimbursable work involving goods and services
provided to the public, including State and local governments,
budgetary resources available for obligation are limited by the amount
of the advance received by a Federal Government account.
Reimbursements are comprised of earned reimbursements and unfilled
customer's orders. An earned reimbursement is the amount representing
orders that have been filled, provided that in the case of orders from
the public, including State and local governments, the amount is
limited by the amount of the advance received, by the Federal
Government, and credited to the appropriate accounts. As with an
earned reimbursement, an unfilled order is available for obligation,
provided that in the case of orders from the public the amount is
limited by the amount of the advance received. It is emphasized that
receivables from the public, including State and local governments,
are not budgetary resources and that an order must be accompanied by
an advance. Throughout the year these amounts are adjusted to the
extent that orders are filled, cancelled, or new orders received.

  Thus, at any one time, the amount of budgetary resources available
for obligation from reimbursements can be calculated as the sum of:

  (a) Orders from other Federal Government accounts that represent
valid obligations of the ordering account, whether or not accompanied
by an advance; and

  (b) Orders from the public, including local and State governments,
to the extent accompanied by an advance received and credited by the
agency to the appropriate account.

  The budgetary resources available for obligation from reimbursements
are presented on the various lines on the S.F. 132 and S.F. 133, as
follows.

  Line 3A. Reimbursements and other income earned. This is the amount
of filled customer's orders from another Federal Government account
and from the public. (Orders from the public will be filled only to
the extent accompanied by an advance paid to a Federal Government
account, unless otherwise permitted by law.) Stated in accounting
terms, this includes:

  (a) cash received as a reimbursement for orders that have been
filled;

  (b) cash received as advances from the public or another Government
account for an order that has been filled; or

  (c) an accounts receivable, but only to the extent that both of the
following apply:

  (1) a valid obligation has been incurred against the ordering
    account; and

  (2) either the ordering account is a Federal account or there is
    specific authority in law to use an order from the public as a
    budgetary resource.

  Line 3B. Change in unfilled customer's orders. These are the
increases or decreases (since the beginning of the fiscal year) in
unfilled orders that are:

  (a) accompanied by an advance; or

  (b) without an advance, but only to the extent that both of the
following apply:

  (1) a valid obligation has been incurred against the ordering
    account; and

  (2) the ordering account is either a Federal account or there is
    authority in law to use an order from the public as a budgetary
    resource.

31.5. Review and approval of fund control regulations.

  The checklist in Appendix B provides guidance for agency use in
preparing draft regulations for approval by OMB.

  An original and three copies of the draft regulations, covering a
proposed new system of fund control will be submitted to the Director
of OMB for approval. In the case of a newly created agency, the
proposed regulations will be submitted within 90 days after the
establishment of such agency. The Director of OMB will indicate to the
agency concerned the action taken within 90 days of receipt of the
draft regulations. Agency fund control regulations are in effect only
to the extent approved by OMB.

  The system of fund control should be reviewed periodically to
determine whether improvements should be made. At a minimum, the
system should be reviewed whenever OMB issues revised regulations or a
reorganization occurs. Draft regulations, consistent with revised
instructions by OMB or the new organization of the agency, should be
submitted to OMB. In addition, the occurence of an Antideficiency Act
violation may indicate a need to strengthen system safeguards.


       Requirements For Reporting Antideficiency Act Violations

32.1. Adverse personnel actions and penalties.

  In accordance with 31 U.S.C. 1349 and 1518, an officer or employee
violating 31 U.S.C. 1341(a) or 1517(a) shall be subject to appropriate
administrative discipline, including--when circumstances warrant--a
written reprimand, suspension from duty without pay, or removal from
office.

  In addition, in accordance with 31 U.S.C. 1350 and 1519 an officer
or employee convicted of willfully and knowingly violating 31 U.S.C.
1341(a), 1342, or 1517(a) shall be fined not more than $5,000,
imprisoned for not more than 2 years, or both.

32.2. Requirements to report Antideficiency Act violations.

  The agency head will furnish to the President, through the Director
of OMB, and to the Congress, information on Antideficiency Act
violations of the following character:

  (1) Overobligation or overexpenditure of an appropriation or fund.
This is any case where an officer or employee of the United States has
made or authorized an expenditure from or created or authorized an
obligation against any appropriation or fund in excess of the amount
available in the account. (31 U.S.C. 1341(a))

  (2) Contract or obligation in advance of an appropriation. This is
any case where an officer or employee of the United States has
involved the Government in a contract or other obligation for the
payment of money for any purpose in advance of appropriations made for
such purpose, unless such contract or obligation is authorized by law.
(31 U.S.C. 1341(a))

  (3) Obligation and expenditure of funds required to be sequestered.
This is any case where an officer or employee of the United States has
made or authorized an expenditure or obligation of funds required to
be sequestered under section 252 of the Balanced Budget and Emergency
Deficit Control Act of 1985, as amended. (31 U.S.C. 1341(a))

  (4) Contract or obligation of funds required to be sequestered. This
is any case where an officer or employee has involved the Government
in a contract or other obligation for the payment of money required to
be sequestered under section 252 of the Balanced Budget and Emergency
Deficit Control Act of 1985, as amended. (31 U.S.C. 1341(a))

  (5) Acceptance of voluntary service. This is any case where an
officer or employee of the United States has accepted voluntary
service for the United States or employed personal services in excess
of that authorized by law, except in cases of an emergency involving
the safety of human life or the protection of property. As used above,
the term "emergencies involving the safety of human life or the
protection of property" does not include ongoing, regular functions of
government, the suspension of which would not imminently threaten the
safety of human life or the protection of property. (31 U.S.C. 1342)

  (6) Overobligation or overexpenditure of an apportionment or
reapportionment. This is any case where an officer or employee of the
United States has authorized or created an obligation or made an
expenditure in excess of an apportionment or reapportionment. This
includes adjustments that cause obligations in expired accounts that
have not been merged to exceed the apportionment for the year in which
such obligations were incurred. (31 U.S.C. 1517(a))

  (7) Overobligation or overexpenditure of an allotment or
suballotment. This is any case where an officer or employee of the
United States has authorized or created an obligation or made an
expenditure in excess of the amount permitted by the prescribed and
approved agency fund control system. (31 U.S.C. 1517(a))

  (8) Overobligation or overexpenditure of other administrative
subdivisions of fund. Generally, the overobligation of other
administrative subdivisions of funds e.g., operating budgets,
allowances, financial plans, statutory limitations other than those
found in the appropriation act and other than those defined as a
statutory limitation in this Circular are violations of the
Antideficiency Act only when it causes an overobligation or
overexpenditure of an allotment, apportionment or appropriation unless
the apportionment or agency's fund control regulations specify
otherwise. (31 U.S.C. 1517(a))

  Overobligation or overexpenditure of the following administrative
divisions of funds are always violations of the Antideficiency Act:
apportionments, allotments, and suballotments. Overobligation or
overexpenditure of other administrative divisions of funds are
violations of the Act only when so specified in the agency's fund
control regulations or when the overobligation results in the
overobligation of an apportionment, allotment, or suballotment.

  The overobligation of an allocation does not necessarily result in a
violation of the Antideficiency Act unless either the allocation is
separately apportioned, e.g., as a category B or in an attachment to
the S.F. 132 (unless otherwise specified on the S.F. 132), or the
agency fund control regulations specifies that an overobligation of
the allocation automatically results in a violation of the
Antideficiency Act.

  Violations involving subapportionments relating to allocation
accounts will be reported through OMB to the President by the agency
that administers the allocation account through the agency
administering the parent account.

  Part VI contains instructions relating to Antideficiency Act
violations in the case of credit programs.

  Part XI contains instructions relating to Antideficiency Act
violations in the case of closed and expired accounts.

32.3. Contents of report to the President.

  The agency report to the President on an Antideficiency Act
violation will be in the form of a letter (original and three copies),
forwarded through the Director of OMB. A sample letter is provided in
exhibit 32.

  The letter will set forth the following data, in the sequence
outlined:

  (1) The title and Treasury symbol (including the fiscal year) of the
appropriation or fund account, the amount involved for each violation,
and the date on which the violation occurred.

  (2) The name and position of the officer(s) or employee(s)
responsible for the violation.

  (3) All facts pertaining to the violation, including the type of
violation (e.g., overobligation of an appropriation, overobligation of
an apportionment, overobligation of an allotment or suballotment), the
primary reason or cause, any statement from the responsible officer(s)
or employee(s) with respect to any circumstances believed to be
extenuating, and any germane report by the agency's Inspector General
and/or the agency's counsel.

  (4) A statement of the administrative discipline imposed and any
further action(s) taken with respect to the officer(s) or employee(s)
involved in the violation.

  (5) In the case where an officer or employee is suspected of
willfully and knowingly violating the Antideficiency Act, confirm that
all information has been submitted to the Department of Justice for
determination of whether further action is needed.

  (6) A statement regarding the adequacy of the system of
administrative control prescribed by the head of the agency and
approved by OMB, if such approval has been given. If the head of the
agency determines a need for changes in the regulations, such
proposals will be submitted as provided in section 31.5.

  (7) A statement of any additional action taken by, or at the
direction of, the head of the agency, including any new safeguards
provided to prevent recurrence of the same type of violation.

  (8) If another agency is involved, a statement concerning the steps
taken to coordinate the report with the other agency.

32.4. Report to the Congress.

  The report to the Congress will be in the form of identical reports
to the Speaker of the House of Representatives and the President of
the Senate.

  If it is identical to the report to the President, a statement to
this effect will be included in the report to the President. If it is
not identical, one copy of the report to the Congress will be
submitted to OMB with the report to the President.

32.5. Report on GAO findings.

  Reports to the President and the Congress should also be made on
violations reported by the General Accounting Office in the connection
with audits and investigations.

  In these cases, the report to the President will indicate whether
the agency agrees that a violation occurred, and if so, it will
contain an explanation as to why the violation was not discovered and
previously reported by the agency. If the agency does not agree that a
violation has occurred, the report to the President and to the
Congress will explain the agency's position.

32.6. OMB-requested investigations and audits.

  Whenever OMB determines that a violation of the Antideficiency Act
may have occurred, OMB may request that an investigation or audit be
undertaken or conducted by the agency. In such cases, a report
describing the results of the investigation or audit will be submitted
to OMB through the head of the agency. If the report indicates that no
violation of the Antideficiency Act has occurred, the agency head will
so inform OMB and forward to OMB a copy of the report. If the report
indicates that a violation of the Antideficiency Act has occurred, the
agency head will report to the President and the Congress in
accordance with sections 32.3 and 32.4, respectively as soon as
possible. If the agency head does not agree that a violation has
occurred, the report to the President and to the Congress will explain
the agency's position.

32.7. Timing of reports by agency heads.

  The required reports to the President and to the Congress, signed by
the head of the agency, will be made immediately after a violation
becomes known.