OMB Circular No. A-11

Expired and Cancelled Appropriations

111.1. Background.

This part provides instructions on the procedures to be followed for
expired and cancelled appropriations, as prescribed in 31 U.S.C.
1551-1557.

The requirements for appropriations available for fixed periods
(i.e., annual and multi-year) differ from those available indefinitely
(i.e., no-year). The general requirements that pertain to
appropriations with fixed availability are described in sections
111.2. The general requirements that pertain to appropriations with
indefinite availability are discussed in section 111.3. Instructions
in the following sections indicate whether they apply to fixed or
indefinite appropriations.

111.2. The life cycle of appropriations.

The life-cycle of appropriations with fixed periods of availability
consists of three sequential phases. The availability of balances of
appropriations to incur, adjust, or pay obligations differs in each
phase. Under the Antideficiency Act, the total cumulative obligations
are limited to the amount originally appropriated. The phases are:

(a) The Unexpired Phase.--During this phase, the appropriation may
be used to incur new obligations and to liquidate (pay) properly
incurred existing obligations. Balances in this phase are unexpired
and uncancelled.

(b) The Expired Phase.--The expired phase begins when the authority
to incur new obligations against appropriations expires. For annual
appropriations this occurs at the end of the fiscal year for which the
funds are appropriated. For multi-year appropriations this occurs at
the end of the last fiscal year for which the funds are appropriated.
During the expired phase, no new obligations can be incurred against
the appropriation, but the balances of an appropriation are available
as follows:

o Expired obligated balances are available to liquidate
obligations properly incurred during the period when the
appropriation was unexpired.

o Expired unobligated balances are available only for upward
adjustments of existing obligations (but not new obligations). In
turn, the expired obligated balances that result from upward
adjustments are available to liquidate properly incurred existing
obligations.

Balances in the expired phase are uncancelled. Unless otherwise
specified by law, this phase lasts for five years after the period for
which the appropriation is available for new obligations. All audit
requirements, limitations on obligations, and reporting requirements
applicable to an appropriation in the unexpired phase continue to
apply to it in the expired phase.

(c) The Cancelled Phase.--At the end of the expired phase, all
obligated and unobligated balances must be cancelled, and the account
is closed. Cancelled balances may not be used to incur or pay
obligations. See section 111.10 for instructions on paying bills.

Collections authorized or required to be credited to a cancelled
appropriation that are received after the account is closed are
required to be deposited in the Treasury as miscellaneous receipts.

Exhibit 111 provides an illustration of a life cycle of an
appropriation.

111.3. Authority for closing indefinite appropriations.

An appropriation available for an indefinite period may be cancelled
if no disbursement has been made against it in two years and the
President or agency head determines that the purposes for which the
appropriation was made have been carried out.

111.4. Treatment of unrecorded obligations.

A commitment, obligation, or expenditure that was properly incurred
prior to the expiration of an appropriation, but not recorded, should
be treated as an upward adjustment of an obligation. For cancelled
appropriations, the upward adjustment may be paid from the one percent
of unexpired funds, as prescribed in section 111.11. Such an
adjustment is still subject to the limitations of section 111.10. An
upward adjustment may not exceed the cancelled unobligated balance of
the cancelled appropriation.

111.5. Treatment of repayments: reporting procedures for reports of
budget execution.

This section covers the life cycle of repayments to appropriations
of the Federal Government. Repayments consist of refunds and
reimbursements. The table that follows this section provides a
summary of the treatment of refunds and reimbursements.

(a) Refunds are the repayments of excess payments. The amounts are
directly related to previous obligations incurred and outlays made
against the appropriation. Refunds are to be deposited to the credit
of the appropriation charged with the original obligation and treated
in the following manner.

(1) Refunds collected by unexpired annual and multi-year
appropriations and uncancelled no-year appropriations.

--Refunds received in the same year in which the obligations are
incurred are netted against obligations incurred (line 8) without
further identification because these amounts have already been
apportioned to the current year.

--Refunds receivable from non-Federal sources, or from Federal
sources where a refund payable has not been obligated by the
refunding account, are not budgetary resources available for
obligation until the refund is collected. These receivables should
not be reported on line 3A, Reimbursement and other income earned,
until they are collected. Neither should these receivables be
factored into line 13, Net unpaid obligations nor should these
receivables create unobligated balances.

--Refunds receivable from Federal sources that pertain to
obligations incurred in prior years, and where a refund payable
was obligated by the refunding account, were budgetary resources
available for obligation in that prior year. The receivables were
reported on line 3A and are already factored into line 13 or the
unobligated balances of that prior year. These should not be
reported again when the refund is collected.

(2) Refunds collected by expired annual and multi-year
appropriations.

--Valid refunds receivable are collections from Federal sources that
pertain to obligations incurred in prior years and are already
factored into the unobligated or obligated balances. These amounts
should not be reported again when the cash is collected.

--Refunds from collections that pertain to obligations incurred in
prior years from (a) non-Federal sources, and (b) Federal sources
where a refund payable was not obligated by the refunding account
in the prior year, are recorded as offsetting collections on line
3.A, Reimbursements and other income, earned, in the expired
column of the report of budget execution. These amounts are
available only for upward adjustments of obligations--see section
111.6(c) (Note: No-year appropriations do not "expire" however,
they may be cancelled.)

(3) Refunds collected by cancelled appropriations.--Refunds to
annual, multi-year, or no-year appropriations that have been
cancelled are required to be deposited in miscellaneous receipts
in the Treasury.

(b) Reimbursements for providing goods and services to others are
required to be deposited to the credit of miscellaneous receipts by 31
U.S.C. 3302(b), unless they are specifically authorized by law to be
credited to the expenditure account. The following are the major
exceptions:

(1) Reimbursable work between Federal appropriations under the
Economy Act.--The Economy Act (31 U.S.C. 1535) authorizes the head
of an agency or major organizational unit within an agency to
place an order with a major organizational unit within the same
agency or another agency for goods or services. Transactions
authorized by the Economy Act are limited by the statutory
requirement that the amount obligated by the ordering
appropriation is required to be de-obligated to the extent that
the agency or unit filling the order has not incurred obligations,
before the end of the period of availability of the ordering
appropriation.

Repayments (in the form of advance payments or reimbursements) from
other Federal government appropriations are available for
obligation when the ordering appropriation records a valid
obligation to cover the order.

For annual and multi-year appropriations accounts performing
reimbursable work.--The advances or unearned reimbursements will
be recorded as offsetting collections on line 3.B, Change in
unfilled customer's orders, of the budget execution reports. When
the goods have been produced or the services performed,
reimbursements earned should be reported on line 3.A,
Reimbursements and other income, earned, and removed from line
3.B, Change in unfilled customer's orders.

If the repayment for a filled order is received after the period of
obligational authority of the performing annual or multi-year
appropriation has expired, the repayment shall be credited to the
expired appropriation, unless other procedures are expressly
prescribed by statute.

If the period of disbursing authority of the performing annual or
multi-year appropriations is cancelled before the repayment is
received, the amounts are required to be sent to miscellaneous
receipts in the Treasury.

For annual and multi-year appropriations ordering reimbursable
work.--The period of time during which the ordering appropriation
is available for obligation is fixed.

If the period of obligational authority of the performing annual or
multi-year appropriation expires before the order is filled, the
ordering appropriation should not be affected, provided that the
performing agency has recorded a valid obligation against the
order. In the event that the performing agency has not recorded a
valid obligation against the order, the ordering agency should
de-obligate funds for the order and record the corresponding
adjustments on either line 4.A, Recoveries of prior year
obligations, actual, for obligations in prior fiscal years, or net
the amount against line 8, Obligations incurred, for obligations
incurred in the current year.

If the period of disbursement of the ordering appropriation is
cancelled before the reimbursement is made to the appropriation
that performed the work, the repayment can only be paid from an
unexpired appropriation that is available for the same purpose as
the closed account.

(2) Revolving funds.--Statutes establishing revolving funds normally
authorize repayments to be credited to the revolving fund that
performs the work.

Revolving funds operate on a reimbursable basis when working capital
(undisbursed cash) is available. Otherwise, advance payments must
accompany the order. The types of working capital are (1)
appropriated amounts; (2) contract authority; (3) borrowing
authority; and (4) orders from other Federal appropriations when
the ordering appropriation records a valid obligation to cover the
order. Revolving funds may not disburse into a negative cash
position in anticipation of Federal or non-Federal reimbursements.

(3) Advances from the public.--Obligations may be incurred against
"orders" from the public provided that the order is accompanied by
an advance. The budgetary resources provided by the order is
denominated by the cash advance accompanying the order. The
advance, per se, is not available for obligation. If both the
order and the advance were to be available for obligation,
budgetary resources would be double-counted.

Advances that are not accompanied by an order may be shown
temporarily as an anticipated order on line 3.C, Reimbursements and
other income, anticipated, of the budget execution report, provided
that the order is anticipated to be received before the fiscal year
ends. Advances from the public for which an order is not anticipated
before the end of the fiscal year will be placed in a deposit fund.
All repayments (i.e., reimbursements and refunds) to appropriations
that are received after the appropriation has been cancelled are
required to be sent to miscellaneous receipts in the Treasury.

The following table summarizes the treatment of refunds and
reimbursements in unexpired, expired, and cancelled annual and
multi-year appropriations.

TREATMENT OF REIMBURSEMENTS

-------------------------------------------------------------------------------------------
Reimbursements authorized to be
credited to the account
--------------------------------------------- Other reimbursements
Performing account Ordering account
-------------------------------------------------------------------------------------------
Unexpired Orders from other The period of time Reimbursements for
appropriation. Federal government during which the providing goods and
accounts will be account can order services are required
recorded as a goods and services is to be deposited in
reimbursement or limited to the period miscellaneous
other income, (i.e., of obligational receipts in the
offsetting collection availability of the Treasury, unless a
credited to the ordering law, such as the
account), on line 3B. appropriation, unless Economy Act,
Orders from the otherwise specifies otherwise.
public that are specifically
accompanied by an authorized by law.
advance are included
on line 3B. When the
work is performed,
the reimbursement or
other income will
move to line 3.A.
-------------------------------------------------------------------------------------------
Expired If the account expires If the account expires Required to be
annual/multi-year before the order is before the order is deposited in
appropriation. filled (e.g., before filled, the miscellaneous
the performing agency performing account receipts in the
incurs the related must return the Treasury.
obligation), the portion of the order
unobligated portion for which the
will be recorded as a performing account,
reduction in unfilled in turn, has not
customer's orders on incurred a valid
line 3B and advance obligation.
payments, if any,
will be returned to The ordering agency is
the ordering account, not affected if the
or to a deposit fund performing agency has
pending transfer to recorded a valid
the ordering account. obligation against the
Repayment for a order. If the
filled order received performing agency has
after the account not recorded a valid
expires, will be obligation, the
credited to the ordering agency will
expired account. de-obligate funds for
the order and record
the adjustments on
lines 4A or 8.
-------------------------------------------------------------------------------------------
Cancelled If the account is If the account is Required to be
appropriation cancelled before cancelled before deposited in
(annual, multi-year, reimbursement is reimbursement is made miscellaneous
or no-year). received, amounts to the performing receipts in the
will be deposited in account, payment can Treasury.
miscellaneous only be made as
receipts in the prescribed in section
Treasury. 111.8.
-------------------------------------------------------------------------------------------

111.6. The expired phase: budget execution reporting procedures.

Beginning with appropriations that expire on or after September 30,
1992, obligated and unobligated balances must be accounted for on
separate reports of budget execution (S.F. 133/143) for each expired
appropriation.

(a) Expired unobligated balances.--At the beginning of the first
expired year, place the expired unobligated balance on line 2.A,
Unobligated balance: Brought forward October 1. This amount should
equal the sum of the lines in the unobligated balances available
section of the final report of budget execution for the unexpired
phase, i.e., the sum of lines 9.A, 9.B and 9.C, Unobligated balances
available. These unobligated balances are now expired budgetary
resources. They are available only for valid upward adjustments of
obligations that were properly incurred against the account during the
unexpired phase.

(Note: The balances on line 9, Unobligated balances, should not
include receivables from outside the Federal Government or receivables
from Federal sources in which the Federal agency has not incurred a
valid obligation for the payable, as these receivables are not
budgetary resources.)

Since the expired resources are no longer available for new
obligations, place the amounts not used for valid adjustments on line
10.E, Other balances not available.

In each succeeding expired year, the amount on line 2.A, Unobligated
balance brought forward October 1, should be the same as the amount on
line 10.E, Other balances not available, of the final report of budget
execution for the prior year.

(b) Downward adjustments.--Place downward adjustments of unpaid
obligations previously incurred on line 4.A, Recoveries of prior year
obligations. The amount should be entered as a positive number because
it increases the expired resources available only for future
adjustments. Downward adjustments do not include previously paid
obligations which require a refund. These refunds will be recorded on
line 3.A, Reimbursements and other income, earned, when received.
Refunds receivable from non-Federal sources, and from Federal sources
where a refund payable has not be obligated, should not be factored
into line 13.C, Obligated balance, end of year.

The amount of the downward adjustment should represent the
cumulative recoveries made since the beginning of the fiscal year for
which the report is submitted. Recoveries made during previous fiscal
years should not be included because either the amounts were used for
valid upward adjustments in previous fiscal years or the amounts are
part of the expired unobligated balances carried forward on line 2.A,
Unobligated balance brought forward October 1.

The phrase "recoveries of prior year obligations" is synonymous with
"downward adjustments of obligations". Place the amounts not used for
valid adjustments during the current fiscal year for which the report
is submitted on line 10.E, Other balances not available.

Upward adjustments of obligations reduce unobligated balances.
Subtract upward adjustments from the expired unobligated balances on
line 10.E, Other balances not available.

The amount should represent the upward adjustments made during the
fiscal year for which the report is submitted. Upward adjustments made
during previous fiscal years should not be included because the
amounts on line 10.E, Other balances not available, have already been
adjusted downward.

Upward adjustments are limited in at least two ways:

(1) Upward adjustments are limited by the amount available for
adjustments on line 10.E, Other balances not available, of the expired
account.

(2) No new obligations may be shown in the expired account columns.
Only upward adjustments of obligations that were incurred in the year
in which the amount was available for obligation are valid, i.e.,
recording obligations that were incurred previously but reported in a
different amount or erroneously not reported.

111.7. The expired phase: obligation adjustments for contract changes.

Upward adjustments to obligations in expired appropriation accounts
caused by "contract changes" that exceed certain thresholds are
subject to additional reporting and approval requirements. A "contract
change" means an order relating to an existing contract under which a
contractor is required to perform additional work. A contract change
does not include adjustments related to an escalation clause.

An agency head or a designated officer in his immediate office must
approve contract changes that will cause cumulative obligational
increases to an appropriation to exceed $4 million during a fiscal
year.

If cumulative obligational increases in an appropriation for
contract changes exceed $25 million in a fiscal year, certain
requirements must be met before obligations for contract changes are
made. In these cases, obligations for contract changes must be
reported to the appropriate authorizing committees of Congress and to
the House and Senate Committees on Appropriations in writing by the
agency head in advance of the obligation. The report must include a
description of the legal basis for the obligation and the policy
reasons for the proposed obligation. The obligation may not be made or
recorded in the agency's accounting records until 30 days after the
report has been submitted.

For the Department of Defense, obligational increases for contract
changes are cumulative at the program, project, and activity level;
for civilian agencies, such increases are cumulative at the
appropriation level.

111.8. The expired phase: alternatives for payment of old obligations.

The length of the expired phase of accounts may be changed by law.
When an agency requires the payment of obligations beyond the normal
five year expired phase, the agency's budget office should submit
proposed changes to appropriation language for the budget year to the
agency's OMB representative for approval. This authority may be
requested only when historical outlay data indicate that the payment
of old balances from unexpired funds would regularly exceed the one
percent limitation or when such payments would severely affect the
current program.

Without this authority, agencies must seek reappropriation of
cancelled balances and defer payment until the appropriation is
available, or pay from current appropriations as described in section
111.10.

Normally, payment of cancelled balances will not be eligible for
funding from Treasury's general claims fund.

111.9. Cancelled accounts: procedures for reports of budget execution.

Expired obligated and unobligated balances are treated differently
on the final report of budget execution (S.F. 133/143) in the year in
which an account will be closed because the remaining balances must be
cancelled. Once an account is reported as cancelled, it should not be
reported again.

(a) Cancellations of unobligated balances.--All reports on budget
execution, other than the final S.F. 133/143 in the year in which an
account will be closed, should show recoveries of prior year
obligations on line 4.A, Recoveries of prior year obligations, actual,
as an expired resource. Any part of a recovery that is not used to
adjust obligations should be added to any expired unobligated balance
shown on line 10.E, Other balances not available. On the final report
of budget execution in the year in which an account will be closed,
all unobligated balances must be presented as cancelled, i.e. as a
negative (-) on line 6, Restorations and write-offs.

(b) Cancellations of obligated balances.--When an appropriation is
required to be cancelled, any remaining obligated balance is cancelled
by listing it as a cancellation (a positive number) on line 4.A,
Recoveries of prior year obligations, actual including it as a
writeoff (a negative number) on line 6, Restorations and write-offs,
and reducing the obligated balance, line 13.C, Obligated balance--end
of year, to zero.

111.10. The cancelled phase: payments.

Legitimately incurred obligations that have not been paid at the
time an appropriation is cancelled cannot be paid from the cancelled
obligated or unobligated balances of the cancelled appropriation.
After an appropriation is cancelled, any obligations or adjustments to
obligations that would have been properly chargeable to that
appropriation may be paid from an unexpired appropriation that is
available for the same purpose as the closed account, provided that:

(a) The obligation or adjustment is not already chargeable to
another unexpired account.

(b) Payment of obligations against cancelled appropriations from
unexpired appropriations is limited to one percent of an unexpired
appropriation. No more than one percent of an unexpired appropriation
may be used to pay any combination of cancelled obligations. This is a
single, cumulative limit. It applies to one percent of the annual
appropriation (not total budgetary resources) for annual accounts and
to unexpired appropriations for multi-year accounts.

For example, assume there is a multi-year account with an
appropriation of $10 million that covers fiscal year 1994 through 1996
that was enacted in fiscal year 1994. In fiscal year 1994, the one
percent limitation is equal to $100,000. At the end of fiscal year
1994, $90,000 was used. In fiscal year 1995, the unused, unexpired
portion ($10,000) of the limitation is available to be used.

(c) Antideficiency provisions continue to apply to cancelled
appropriations. The authority to pay obligations against closed
accounts from one percent of current appropriations cannot be used to
exceed the original appropriation.

When agencies cancel obligations under the provisions of Public Law
101-510 (31 U.S.C. 1551-1557), a tracking process should be
maintained. Agencies should also maintain proper general ledger
controls for obligations pertaining to cancelled appropriations to
prevent overpayment. General ledger accounting instructions are
provided by the Department of Treasury, Financial Management Service.

111.11. The cancelled phase: one percent apportionment requirement.

Unless otherwise provided by OMB, a footnote should be appended to
each apportionment containing appropriations realized as follows:
"Pursuant to 31 U.S.C. 1553(b), not to exceed 1% of the total
appropriations for this account is apportioned for the purpose of
paying legitimate obligations related to cancelled appropriations."

111.12. Antideficiency Act violations.

Agencies are required to report violations of the Antideficiency Act
when the following conditions occur: (Note: See section 32 of this
Circular for instructions on reporting Antideficiency violations.)

(a) New obligations and expenditures or adjustments to obligations
and expenditures exceed the original appropriations. 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 account in excess of the amount
available in the original appropriation or fund account.

(b) New obligations or any expenditures in cancelled accounts. 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 an account that was closed pursuant to 31 U.S.C.
1552-1557.

(c) New obligations and expenditures or adjustments to obligations
and expenditures that exceed the amount apportioned or allotted. 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 account in excess of the
amount apportioned or allotted to the original appropriation or fund
account.