ACCOUNTING PRINCIPLES AND STANDARDS HANDBOOK

# CHAPTER 7. ADMINISTRATIVE CONTROL OF FUNDS

# Section 1.0 General

This Chapter establishes policy and prescribes a system for the
administrative control of all funds in the Departmental offices and
operating units (hereafter referred to as "organization units"). This
system of administrative control enables the Secretary to determine
responsibility for the over-obligation or over expenditure of
appropriations, apportionments, statutory limitations, allotments,
suballotments, and other administrative sub-divisions. It also enables
the Secretary to promptly report to the President and to the Congress on
those violations required by statute to be so reported.

# Section 2.0 Authority

> .01 These policies and procedures are issued pursuant to the following
> laws and regulations, and have been approved by the Director, Office
> of Management and Budget, as required by 31 U.S.C. Sec. 1514:
>
> a\. [Title 31 United States Code (U.S.C.), Money and
> Finance](http://www4.law.cornell.edu/uscode/31/):

1.  Secs. 1301, 1341-1342, 1349-1351, 1511-1519 (part of the
    Antideficiency Act, as amended);

2.  Secs. 1101, 1104-1108, 3324 (part of the Budget and Accounting Act,
    1921, as amended);

3.  Secs. 1501-1502 (part of Section 1311 of the Supplemental
    Appropriations Act of 1950);

4.  Secs. 1112, 1531, 3511-3512, 3524 (part of the Budget and Accounting
    Procedures Act of 1950); and

5.  Secs. 1551-1558 (part of National Defense Authorization Act for
    Fiscal Year 1991, Public Law (P.L.) 101-510, enacted November
    5, 1990) prescribes the rules for determining the availability of
    appropriation and fund balances and establishes the procedures for
    closing appropriation and fund accounts.

> b\. Impoundment Control Act, Title X [of the Congressional Budget and
> Impoundment Control Act (CBA) of
> 1974](http://www.house.gov/rules/jcoc2y.htm) (P.L. 93-344), as amended
> by [Federal Credit Reform Act of
> 1990](http://thomas.loc.gov/cgi-bin/query/F?c101:4:./temp/~c101vYHi0q:e1995277:)
> (part of the Omnibus Budget Reconciliation Act of 1990, P.L 101-508),
> codified at [2 U.S.C. Secs.
> 681-688](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t01t04+10151+196++(Title X )          )
>
> c\. [Office of Management and Budget (OMB) Circular A-11,
> "Preparation, Submission, and Execution of the
> Budget",](http://www.whitehouse.gov/omb/circulars/index.html) as
> amended, and related OMB guidelines.
>
> d\. [Department Organization Order 10-5, "Chief Financial Officer and
> Assistant Secretary for
> Administration",](http://usasearch.gov/search?v%3Aproject=firstgov&v%3Afile=viv_893@31%3ALr4RfU&v%3Astate=root|root&opener=full-window&url=http%3A%2F%2Fdms.osec.doc.gov%2Fcgi-bin%2Fdoit.cgi%3F218%3A112%3A55e8738f8db692af91d24b2d45d888a144363c9ebed9174e88d843a6770d0753%3A1&rid=Ndoc9&v%3Aframe=redirect&rsource=firstgov-msn&v%3Astate=(root)|root&rrank=0&)
> as amended, which covers the conduct of all administrative functions
> required in the overall management of the Department.

# Section 3.0 Scope

The provisions of this Handbook apply to all organization units,
appropriations, and funds controlled by the Department of Commerce.

# Section 4.0 Definitions, Terminology, and Concepts

The terminology and concepts used in this Chapter have the same meaning
as those set forth in OMB Circular A-11, Part IV, which requires that
each executive agency establishes regulations governing the agency
system for administrative control of funds.

> .01 [Definitions]{.underline}

a.  Administrative Division or Sub-division of Funds - An administrative
    division or sub-division of funds is any distribution of an
    appropriation or fund, such as an apportionment or allotment. Over
    obligation or over-expenditure of apportionments and allotments is
    always a violation of the Antideficiency Act.

b.  Apportionment **-** A distribution made by OMB of amounts available
    for obligation in an appropriation or fund account into amounts
    available for specified time periods, activities, projects, objects,
    or combinations thereof. The amounts so apportioned limit the
    obligations that may be incurred.

c.  Reapportionment - A revision approved by OMB of a previous
    apportionment for an appropriation or fund account. This approved
    revision would ordinarily cover the same period, project, or
    activity covered in the original apportionment.

d.  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.

e.  Availability of Budgetary Resources - The availability of budgetary
    resources for obligations and expenditures are limited by purpose,
    amount, and time. There are three types of authority for incurring
    new obligations that are limited by time:

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1.  Annual authority;

2.  Multiyear authority; and

3.  No-year authority.

> During the period where budgetary resources are available for
> incurring new obligations, the account that is empowered by such
> authority is called unexpired account.

f.  Agency Limitation **-** For fund control purposes, an agency
    limitation is any administrative division or sub-division of funds
    made by agency officials that restricts the use of Government funds.

g.  Expired Accounts - These are appropriation or fund accounts in which
    the balances are no longer available for incurring new obligations
    because the time available for incurring such obligations has
    expired. Unless otherwise specified by law, annual or multi-year
    authority (for incurring new obligations) for an account expires at
    the beginning of the fiscal year following the specified year or
    multi-year period.

> For five years, the expired account is available for expenditure to
> liquidate valid obligations incurred during the unexpired period. At
> the end of the fifth year, the expired account is canceled.

# Section 5.0 Responsibilities and Functions of Individuals

> .01 [General]{.underline}
>
> In accordance with [OMB Circular A-11, Part
> IV](http://www.whitehouse.gov/omb/circulars/a11/capman.pdf) Section,
> and [Title 31 U.S.C. Sec.
> 1514](http://www.law.cornell.edu/uscode/html/uscode31/usc_sec_31_00001514----000-.html),
> the Secretary is responsible for prescribing a system of
> administrative control of funds. The Secretary has delegated to the
> Assistant Secretary for Administration/Chief Financial Officer (CFO)
> (hereafter referred to as the CFO), the responsibility for
> establishing and maintaining a system of funds control in accordance
> with the criteria and policies set forth in this Chapter. The CFO is
> also responsible for developing and prescribing accounting systems
> that will provide for prompt and accurate recording in the official
> accounts of all financial transactions having an effect on
> apportionments and other sub-divisions of funds. The CFO has oversight
> responsibility for budgeting and management of financial resources to
> assure optimum utilization of funds in carrying out programs of the
> Department; coordinating administrative management matters with other
> departments and agencies; providing for budget coordination and
> liaison with OMB; providing central liaison for the Department with
> the Appropriations Committees of the Congress; and otherwise
> representing the Department on such matters with public or private
> groups.
>
> .02 [Responsibility]{.underline}

a.  Allotter - Each individual assigned responsibility for issuing
    allotments is responsible for limiting the amounts made available
    for obligation and/or outlay to the amounts apportioned or otherwise
    authorized by law.

b.  Allottee - Each individual receiving an allotment of funds is
    responsible for restricting obligations and/or outlays to the
    amounts available in such allotment.

> .03 [Delegations of Authority]{.underline}

a.  The Director of the Office of Budget (OB), who reports directly to
    the CFO, is authorized to establish and maintain a close working
    relationship with OMB and the Budget and Appropriations Committees
    of the Congress. OB is delegated responsibility for budget
    formulation, guidance for and monitoring of budget execution,
    management analysis, and reporting on the status of program
    operations.

b.  The Director of the Office of Executive Budgeting and Assistance
    Management (OEBAM) has Department-wide responsibility for developing
    and implementing financial assistance administration and operational
    policies; and for formulating, justifying, and executing the Office
    of the Secretary (OS) resources. OEBAM serves as the Grant Officer
    for ITA, MBDA, NTIA, and OS.

c.  The Director of the Office of Financial Management (OFM), who
    reports directly to the CFO, is responsible for developing an
    integrated Departmental accounting system that meets the
    administrative control of funds requirements contained in the Office
    of Federal Financial Management (OFFM) Core Financial System
    Requirements, the DOC Budget and Program Analysis Handbook, and the
    DOC Handbook of Accounting Principles and Standards. The system and
    other control procedures developed by the Director must support an
    integrated process that will accomplish the following:

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1.  Provide budget execution capability by recording the funding and
    related budget execution documents;

2.  Establish and track the use of funds against limitations assigned;

3.  Track the use of these funds through operating or financial plans;

4.  Maintain current information on commitments and obligations
    according to the classification structure, on a fund-by-fund basis;
    and

5.  Provide for certification of funds availability prior to the
    issuance of a commitment, obligation, or expenditure.

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d.  Heads of Organization Units are responsible for the following:

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1.  Assuring that operations are maintained within the limits of
    approved organization budgets;

2.  Obtaining approvals from OMB and complying with Congressional
    requirements regarding reprogramming actions through the CFO, OB,
    and OEBAM;

3.  Designating budget officers responsible for preparing and
    submitting, on a timely basis, apportionment plans and prescribed
    program backup, and reports and other required data for the
    organization units for which they are responsible;

4.  Developing procedures to provide financial and employment data
    needed in order to submit central agency, as well as organization
    unit, management reports on a timely basis, forwarding the required
    data to the CFO, and maintaining liaison with OB, OEBAM, and OFM on
    the resolution of problems with the support of the Organization
    Units' accounting, budget, and personnel officers; and

5.  Cooperating in maintaining efficient use of funds within the
    limitations of administrative control and, when applicable, for
    calculating credit program subsidies in accordance with OMB
    guidelines with the support of the accounting, budget, and program
    officials at all Department organization levels.

It is essential that bureau program officials having budget
responsibilities consult with the unit's budget officer, the Director
for Financial Management, and legal counsel when it appears that there
may be problems in meeting the requirements of any law governing
administrative controls with a view toward resolving the problems before
they become violations of the Act.

# Section 6.0 Actions Prohibited

> .01 [General]{.underline}
>
> An Antideficiency Act fund violation can occur at any time during the
> current period when obligations or outlays exceed the allotment,
> apportionment, or appropriation. A fund violation can occur at any
> time during the expired period when obligations or outlays exceed the
> amounts apportioned or otherwise available by law. In addition, each
> obligation or outlay transaction which exceeds amounts available must
> be examined to determine responsibility for causing the violation.
> Actions which subsequently relieve the violation condition do not
> negate the fact that a violation occurred, which must be reported. All
> violations must be reported, except those that are one dollar (\$1) or
> less.

.02 [Types of Violations]{.underline}

> The Antideficiency Act, as amended, requires that the President,
> through the Director of OMB, and Congress be furnished information on
> violations of the following character:

a.  Over-obligation or Over-expenditure 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 ([13 U.S.C.
    1341](http://www4.law.cornell.edu/uscode/31/usc_sec_31_00001341----000-.html)(a)).

b.  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. Sec.1341(a)). If authorized by law, but not financed by an
    appropriation, the budget authority recorded to cover such
    transactions is known as contract authority. If the contract
    authority is provided in anticipation of receipts, then obligations
    incurred against such contract authority cannot be liquidated unless
    either the receipts are collected and credited to the account or an
    appropriation has been enacted (31 U.S.C. Sec. 1341(a)).

c.  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 (1) an emergency involving the
    safety of human life or the protection of property; (2) use of
    student volunteers under agreement between the Department and the
    school, as provided by OMB regulations; or (3) as permitted
    specifically by law (31 U.S.C. Sec.1342). (See [DAO
    202-311](http://204.193.232.34/cgi-bin/doit.cgi?205:112:b8aaf989f8d2b3faa25bc06d588259602f2848051e697bb18a84f603496ae8a1),
    "Voluntary and Uncompensated Services," for policies, guidelines,
    and procedures of the Department concerning voluntary and
    uncompensated services.)

d.  Over-obligation or Over-expenditure 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 to
    exceed the apportionment for the year in which such obligations were
    incurred (31 U.S.C. Sec.1517(a)(1)).

e.  Over-obligation or Over-expenditure of an Allotment. 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. Sec. 1517(a)(2)).

f.  Over-obligation or Over-expenditure of a Credit Limitation. This is
    any case where an officer or employee of the United States has
    authorized or created an obligation or made an expenditure exceeding
    a credit limitation contained in an appropriation act restricting
    the amount that can be obligated or committed for a credit program
    (31 U.S.C. Sec.1517(a)). Obligation or disbursement from each loan
    program, financing, and liquidation account in excess of: (1) direct
    and guaranteed loan subsidies, direct and guaranteed loan levels,
    and any limitation specified by law, or (2) the amount apportioned
    for the amounts specified above, whichever is the lower.

g.  Expired Accounts. Agencies are required to report violations of the
    Antideficiency Act when the following conditions occur:

    1.  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. This means that the balances from other years in the
        account are no longer fungible between fiscal years.

    2.  New obligations or any expenditures in expired 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 expired account. Expired accounts will
        remain available for legitimate obligation adjustments but not
        for new obligations. As of September 30 of the fifth fiscal year
        after the period of obligational availability ends, for each
        account, all obligated and unobligated balances shall be
        cancelled and the expired account shall be closed. No
        disbursements may be made from closed expired accounts. For
        example, accounts that expired in fiscal year 2008 will be
        closed as of September 30, 2013. However, after an account is
        canceled, any legitimate obligations or adjustments chargeable
        to the canceled account may be paid from another unexpired
        appropriation available for the same purpose as the canceled
        account, [not to exceed the amounts available at the time the
        account was canceled.\
        ]{.underline}.

    3.  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.

h.  Charging the Wrong Account. Deliberately charging the wrong account
    for purposes of expediency or administrative convenience, with the
    expectation of rectifying the situation by a subsequent transfer,
    violates 31 U.S.C. Sec. 1301 (a). The transferred funds would be
    used for a purpose other than that for which they were originally
    appropriated. If the receiving appropriation is exceeded, the
    Antideficiency Act is also violated.

i.  Indemnification Clauses and Open-ended Liabilities. Agreements that
    contain clauses in which the Department or any operating unit
    promises to "indemnify" the other party for loss or injury, or that
    otherwise commit the Department or operating unit to an open-ended
    (and therefore potentially unlimited) liability or expense violate
    the Antideficiency Act even where the circumstance requiring the
    expense is never triggered. Such clauses must be amended as
    appropriate or negotiated out of the agreement before the agreement
    may be signed.

# Section 7.0 Penalties

Any officer or employee, who violates provisions of 31 U.S.C. Secs.
1341(a), 1342, or 1517(a) (the Antideficiency Act) shall be subject to
appropriate administrative discipline. Administrative discipline may
consist of the following:

a.  Letter of reprimand or censure for the official personnel record of
    the officer or employee;

b.  Unsatisfactory performance rating;

c.  Transfer to another position;

d.  Suspension from duty without pay; or

e.  Removal from office.

In addition, any person who knowingly and willfully violates these
prohibitions shall be fined not more than \$5,000, imprisoned for not
more than two (2) years, or both.

# Section 8.0 Reporting Requirements

> .01 [Responsibilities]{.underline}
>
> Since a determination concerning liability under this Act is within
> the province of the Department's Office of General Counsel, the
> organization unit affected shall consider the following list of
> guidelines in gathering the pertinent facts:

a.  The accounting system shall be the record for determining whether a
    violation exists, for the extent of the violation, and for assigning
    individual responsibilities. If the violation involves a sub-system
    approved by the CFO, that system shall be the record for such
    determination except where the two (2) systems conflict. In the
    latter case, the Office of Financial Management will determine which
    set of records is correct.

b.  The Department's Office of General Counsel shall make the
    determination as to whether there has been a violation of the Act.
    The Office of Financial Management shall cooperate in reviewing and
    determining the facts from accounting records or resolving conflicts
    between accounting and approved sub-systems. The Office of Personnel
    shall cooperate in the determination of the extent of administrative
    discipline to be applied.

c.  Some actions may be considered so contrary to good management
    practices as to indicate possible negligence to the extent that an
    individual contributed to the violation. These actions may include,
    but are not limited to the following:

    1.  Failure of an allottee to formalize operating plans in time to
        establish administrative control of obligations or expenditures
        and to present such plans for incorporation into the accounting
        system;

    2.  Failure of an allottee to maintain such plans in a current
        status throughout the period of availability of an
        appropriation;

    3.  Failure of an accounting officer to monitor and analyze accounts
        in a professional manner and to provide formal notice of an
        impending violation where professional judgment would warrant
        such action;

    4.  Failure of an allottee to respond in-kind to a formal warning
        from an accounting officer of an indication of impending
        violation;

    5.  Direct approval by an allottee of an obligation beyond the
        limitation of an allotment or sub-allotment;

    6.  Failure of an accounting officer to maintain the accounting
        system;

    7.  Failure of an accounting officer (or program official to provide
        such information) to enter a commitment (estimate) in an
        accounting record, e.g., GPO Printing Requisition to determine
        the individual responsible for that commitment;

    8.  Failure of an automatic data processing manager to maintain an
        accounting system as designed or to provide highest priority to
        situations involving administrative control of funds;

    9.  Failure of a contracting/procurement officer, or any other
        approving official, to obtain the approval of an official
        authorized to certify fund availability before entering into a
        contract or a change order;

    10. Failure of a certifying officer, in conjunction with the
        requirement in [31 U.S.C. Sec.
        3528](http://www4.law.cornell.edu/uscode/31/usc_sec_31_00003528----000-.html),
        to determine that payments are in accordance with law and
        represent a legal obligation under the fund involved, to
        determine that an expenditure is generally preceded by an
        operating plan entered in the accounts, or is otherwise
        specifically approved by the allottee;

    11. Failure of an employee to act promptly in matters of assembling,
        recording, and reporting obligations, including those personnel
        who have responsibility for administrative approval of
        expenditures;

    12. Failure of any employee to cooperate with an allottee in
        formalizing control plans and revisions of plans in a timely
        manner; and

    13. Failure of an employee responsible for furnishing an estimate to
        be recorded as an obligation to prepare such an estimate with
        reasonable skill and competence.

        d.  Violations may occur because of the actions of other
            agencies, particularly where the Department is required to
            enter into interagency agreements. If inadequate financial
            information has been furnished by another agency, which
            could cause an organization unit to be in violation of the
            Act, the facts should be established and reported as with
            any other report of a violation.

> .02 [Reporting to the Chief Financial Officer]{.underline}
>
> It shall be the primary responsibility of the chief of the accounting
> office or other organization unit in which the official accounts are
> maintained to immediately initiate written reports of obvious or
> possible violations. However, any employee of the Department having
> knowledge of an apparent violation shall be responsible for initiating
> a written report through appropriate channels. In either instance, the
> report shall be addressed to the Head of the Organization Unit. The
> Head of the Organization Unit shall report to the Chief Financial
> Officer (CFO), IMMEDIATELY after it has been established that a
> violation has occurred and shall also send an informational copy of
> the report to the Director for Budget (OB), the Director for Executive
> Budgeting and Assistance Management (OEBAM), and the Director for
> Financial Management (OFM). In the event that investigations are not
> completed and an external report made within six months of discovery,
> quarterly reports will be reported to the OB, OEBAM, and until the
> investigation discloses that the violation did not occur or an
> external report is made.
>
> The Director, OFM, will prepare the report for violations, which occur
> in the Office of the Secretary.

.03 [Reporting to the President and Congress]{.underline}

> If it is determined that a violation has occurred, then external
> reports are required. One report shall be in the form of a letter
> (original and three copies, plus the number of copies desired for
> internal use) to the President, prepared for the signature of the
> Secretary and forwarded to the President through the Director of OMB.
> The opening sentence of the letter should be, "This letter is to
> report a violation of the Antideficiency Act, required by [Title 31
> United States Code Secs. 1341(a),
> 1342](http://www4.law.cornell.edu/uscode/31/usc_sup_01_31_08_II_10_13_20_III.html),
> [and
> 1517](http://www4.law.cornell.edu/uscode/31/usc_sec_31_00001517----000-.html)(a)."

a.  The letter will set forth the following data, preferably in the
    sequence indicated:

    1.  The title and 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 the pertinent facts of the violation, including the type of
        violation, (e.g., overobligation of an allotment or
        apportionment of an appropriation, etc.) the primary reason or
        cause, any statement from the responsible officer or employee
        with respect to any circumstances which he or she believes to be
        extenuating, and any germane report by the Department's
        Inspector General and/or the General Counsel.

    4.  A statement of administrative discipline imposed by the Head of
        the Organization Unit or CFO within the Office of the Secretary,
        and any further steps taken with respect to the officer or
        employee, or an explanation as to why no disciplinary action is
        considered necessary.

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

    6.  A statement regarding the adequacy of the system of
        administrative controls prescribed by the Head of the
        Organization Unit or CFO within the Office of the Secretary and
        approved by the OMB, if such approval has been given. If the
        head of the agency determines a need for changes in the
        regulations, such proposals should be included as outlined in
        OMB Circular A-11, Part 4, Section 150.7.

    7.  A statement of any additional action taken by, or at the
        direction of, the Head of the Organization Unit or CFO within
        the Office of the Secretary, including any new safeguards
        provided to prevent recurrence of the same type of violation.

    8.  A statement concerning the steps taken to coordinate the report
        with the other agency if another agency is concerned.

    9.  The violation will be reported through the Department by the
        agency administering the allocation if an allocation account is
        involved in a violation.

        b.  Informational copies of the report to the President will
            also be sent to the Department's Office of the Inspector
            General and the Government Accountability Office.

        c.  The second report will be made to Congress as required by
            law. This report, using the same format as that submitted to
            the President (see sub-section a. above), will also be
            prepared for the signature of the Secretary and will be
            addressed to the President of the Senate and the Speaker of
            the House. A copy of this report will be submitted to OMB
            with the report to the President. If the reports to the
            President and Congress are identical, a statement to this
            effect should be included in the report to the President.

> All reports to the President and the Congress under this paragraph
> will be forwarded for signature to the Secretary through the CFO.
> After the Secretary has signed the report, an informational copy will
> be provided to the Director, OB, and the Director, OEBAM. In addition
> to reports of violations discovered by organization units or offices
> of the Department, reports will also be made on violations not
> previously reported which are included in findings of the Government
> Accountability Office (GAO) in connection with audits and
> investigations. In these cases, the reports should contain an
> explanation as to why the violation was not discovered and previously
> reported. If the Department does not agree with GAO that a violation
> has actually occurred, a letter explaining the reason for the point of
> view should be prepared for the Secretary's signature and transmitted
> through normal channels for submission to the Comptroller General with
> a copy to the Director of OMB.

.04 [Financial Statement Disclosure]{.underline}

> Any violations of appropriations or other fund limitations shall be
> disclosed in the notes to the financial statements. Any major
> restrictions or limitations on the use of funds (such as limitations
> on amounts which can be spent for certain types of expenditures, e.g.,
> travel) contained in the appropriation acts shall also be disclosed,
> as well as any violations of such restrictions.

[Section 9.0 Relationship of Accounting and Fund Control
Systems]{.underline}

The basic responsibility for recording and reporting financial
transactions as obligations is prescribed in the Supplemental
Appropriations Act of 1950, Section [1311 (31 U.S.C. Secs.
1501-1502](http://www4.law.cornell.edu/uscode/31/usc_sup_01_31_08_II_10_15_20_I.html)).
In accordance with *the [Office of Federal Financial Management Core
Federal Financial Management System
Requirements](http://www.whitehouse.gov/omb/financial/ffs/012306_Core_Requirements.pdf),*
the accounting system should incorporate appropriate techniques to
assist in achieving funds control. [OMB Circular A-11, Section
150](http://www.whitehouse.gov/omb/circulars/index.html) specifies the
criteria for an adequate system of administrative control of funds to
comply with the requirements of the Antideficiency Act, [31 U.S.C. Sec.
1514](http://www4.law.cornell.edu/uscode/31/usc_sup_01_31_08_II_10_15.html),
as amended, and it provides that funds control systems be fully
supported by the accounting systems. Pursuant to these requirements, the
following accounting, reporting, and internal controls shall be
maintained:

.01 [Accounting System]{.underline}

> The Departmental accounting system(s) shall be designed and maintained
> in a manner to assist responsible officials in restricting the
> authorization or incurrence of commitments, obligations, and
> expenditures to amounts available in the apportionment or allotment.
> The Departmental accounting system(s) must provide timely disclosure
> of the following:

a.  Total valid obligations incurred to date, and total budgetary
    resources available for obligations within each apportionment,
    allotment, or other administrative sub-division. Credit accounts
    will be handled in the same manner as non-credit accounts.

b.  Restrictions contained in appropriation acts or other statutes,
    along with total obligations incurred against such restrictions to
    date.

c.  Status of estimated reimbursements, including orders received,
    amounts earned, and amounts collected to date.

d.  The authorization or creation of commitments, obligations, or
    expenditures that exceed apportionments and allotments.

> .02 [Allotment Accounting and Reporting]{.underline}
>
> Allotment accounting and reporting procedures shall be prescribed as
> an integral part of any accounting and reporting system. Provision
> shall be made for prompt and accurate recording in the official
> accounts of all transactions affecting an allotment, and timely
> reporting by the accounting organization on its status to the
> allottee.
>
> .03 [Accounting Records and Fund Status Reports]{.underline}
>
> The accounting records and the funds status reports must be
> periodically verified. This verification must take place at least
> annually so that the Report on Budget Execution (SF-133) and the
> Year-End Closing Statement (TFS Form 2108) can be certified as correct
> by the CFO, or authorized designee for all accounts, including those
> with a zero balance. These reports are submitted through FACTS
> (Federal Agencies' Centralized Trial Balance System) II. The
> certification is necessary to assure that all source documents that
> affect the appropriation and fund balances have been recorded
> properly, accurately, completely, and on a timely basis. During this
> verification, the validity of all obligations will be substantiated
> and adjustments will be processed accordingly. This verification will
> be accomplished by consulting with the program officials that are in a
> position to know the validity of each obligation and are charged with
> the responsibility for administering the funds that have been allotted
> to their programs. Treasury does not require that agencies certify
> FACTS II submissions for the first, second, or third quarter.

# Section 10.0 Apportionments

> .01 [General]{.underline}
>
> Specific requirements for apportionments and reapportionments are
> contained in [OMB Circular A-11, Part IV, Section
> 120](http://www.whitehouse.gov/omb/circulars/index.html). All accounts
> must be apportioned except as provided in Part IV of the Circular.
> Supporting material for apportionment requests should show planned
> spending by program activities unless otherwise specified by OMB
> program staff. The authority to request apportionment or
> reapportionment of all Departmental funds by OMB has been delegated to
> the CFO, who has in turn re-delegated that authority to the Director
> for Budget (see [DAO
> 203-1](http://204.193.232.34/cgi-bin/doit.cgi?205:112:b8aaf989f8d2b3faa25bc06d588259602f2848051e697bb18a84f603496ae8a1),
> as amended.) The one exception is for apportionments or
> reapportionments, which indicate the need for supplemental budget
> authority. These requests to OMB must be accompanied by the CFO's
> determination of the reasons for a deficiency apportionment.
> Apportionments that anticipate the need for a deficiency or
> supplemental appropriation under [31 U.S.C. Sec.
> 1515](http://www4.law.cornell.edu/uscode/31/usc_sup_01_31_08_II_10_15.html),
> will be specifically identified on the apportionment request (SF 132)
> as discussed in OMB Circular A-11, Part IV, Section 120.41.

a.  All appropriations, trust, and public enterprise funds, which have
    amounts available for obligation, must be apportioned unless
    specifically exempted by OMB. Amounts to be apportioned shall
    include amounts to be reimbursed to the appropriation or fund. Funds
    exempted from apportionment by OMB, either by general regulation or
    by specific administrative action, may include certain deposit
    funds, trust funds, consolidated working capital funds, franchise
    funds, allocation accounts, and revolving funds.

b.  Separate apportionments are required in cases when an appropriation
    commingles one year and multiple year funds and separate accounts
    are established by the Treasury for each fund. New apportionment
    action is required for budgetary resources available beyond the end
    of the fiscal year.

c.  Apportionment and reapportionment requests shall be prepared in the
    manner prescribed by [OMB Circular
    A-11](http://www.whitehouse.gov/omb/circulars/index.html) and the
    DOC [Budget and Program Analysis
    Handbook](http://www.osec.doc.gov/bmi/budget/) by each organization
    unit for the review and approval of the Director for Budget. OMB
    action on apportionment requests will be coordinated by OB who will
    forward the original of the OMB apportionment action to the
    organization unit.

d.  The Office of Budget is responsible for forwarding the originally
    approved apportionment schedule (SF 132) to the accounting officer
    servicing the organization unit and to the Director for Financial
    Management. The approved SF 132 is the authorizing document for
    opening prescribed general ledger accounts for the administrative
    control of funds. For loan programs, Category B funds may be further
    apportioned according to loan subsidy, default claims, interest to
    Treasury, administrative expenses, capitalized costs, interest
    supplements, payments to receipt accounts, and other categories.

> For guaranteed loan programs, the loan level will be apportioned based
> upon new loan commitments supportable by the subsidy budget or, in the
> case of a negative subsidy, the amount authorized by the appropriation
> act.
>
> .02 [Apportionment Accounting and Reporting]{.underline}
>
> Budget reporting is completed on the SF 133, Report on Budget
> Execution, through FACTS II on a quarterly basis.
>
> .03 [Guidance]{.underline}
>
> The Director for Budget provides departmental guidance on the
> processing of all types of apportionments, rescissions, and deferral
> actions. (See [DOC Budget and Program Analysis
> Handbook](http://www.osec.doc.gov/bmi/budget/Budget Handbook.htm).)

# Section 11.0 Allotments and Sub-allotments

Allotments shall be made at the highest practicable level within each
appropriation or fund. Whenever possible, only one allotment should be
issued for each appropriation or fund.

Organization plans shall be used to reflect appropriations from Congress
and apportionments from OMB.

> .01 [Organizational Control]{.underline}
>
> The development and maintenance of a system for fund control shall
> include the formal allotment of funds as a means for establishing,
> within appropriation limitations established by the Congress and funds
> apportioned by OMB, the amounts available for obligation and outlay.
> The allotment system shall be established and maintained in such a
> manner as to assure compliance with all limitations, including those
> of the Antideficiency Act, as amended. Organization units' internal
> procedures shall clearly define an unbroken chain of responsibility
> from the Head of an Organization Unit to those exercising
> responsibilities for fund control.
>
> .02 [Restrictions]{.underline}

a.  The sum of allotment amounts issued shall not exceed the
    apportionment.

b.  The sum of sub-allotment amounts issued shall not exceed the
    allotment amount.

c.  Allotments or other administrative sub-divisions shall be fixed in
    amount and changed only when authorized by the responsible budget
    official who issued the sub-division initially.

d.  Congressional restrictions contained in appropriation acts shall be
    covered.

e.  No officer or employee shall make or authorize an expenditure or
    create or authorize an obligation without approval of an official
    authorized to certify funds availability.

f.  No appropriation shall be used to pay obligations incurred under
    another appropriation, even when funds have been temporarily
    exhausted and when reimbursement is contemplated after supplemental
    appropriations are approved.

g.  An appropriation for a specific purpose is available for that
    purpose only, to the exclusion of a more general appropriation,
    which might otherwise be considered available for the same purpose.

h.  Administrative election should be used when either of two (2)
    appropriations reasonably could be used for certain purposes.
    Administrative election to use one (1) of the appropriations
    precludes the use thereafter of the other appropriation for the same
    purpose.

i.  The exhaustion of an appropriation for a specific purpose does not
    authorize charging excess expenditures or obligations to a general
    appropriation, which would otherwise be available for the same
    purpose.

j.  The recording of obligations is not to be delayed due to lack of
    funds, in some circumstances. Examples include authorized payroll,
    and obligations arising under defaulted guaranteed loans.

k.  No obligation shall be made or authorized, or an expenditure made,
    when no allotment exists or is in excess of the existing allotment.

l.  The procurement of supplies is subject to the prohibition in 41
    U.S.C. Sec. 13 against making contracts in excess of one (1) year.

> .03 [Mandatory Requirements]{.underline}

a.  No commitment shall be made without certification of fund
    availability by recording it in a Departmental accounting system(s).

b.  Obligations shall be recorded in a Departmental accounting system(s)
    prior to a transaction with a vendor.

c.  Disbursements shall be made in compliance with the [Prompt Payment
    Act](http://www4.law.cornell.edu/uscode/31/usc_sup_01_31_08_III_10_39.html)
    (when applicable) and recorded promptly.

d.  Commitments, obligations, and disbursements shall be identified with
    an appropriation or fund at the time incurred.

e.  Accounting officers and allottees shall be responsible for the
    validity of all commitments, obligations, and disbursements.

f.  Funds transferred under the Economy Act, [31 U.S.C. Sec.
    1535](http://www4.law.cornell.edu/uscode/31/usc_sup_01_31_08_II_10_15_20_III.html),
    for payment of services or supplies furnished to another Federal
    agency, are available only for the same time period as the
    appropriation from which the transfer is made. Interagency
    agreements chargeable to fiscal year appropriations are required to
    be deobligated at the end of the fiscal year to the extent the
    performing agency has not incurred valid obligations under the
    agreement.

g.  Obligations made or authorized under a fiscal year appropriation
    must meet a bona fide need of the fiscal year to be charged.

h.  Guaranteed loan commitments must be supported by the subsidy budget
    authority being allotted. Any obligated balances that are canceled
    after the five (5)-year period may be paid from the unexpired
    appropriation made for the same general purpose.

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i.  Payment of obligations against a cancelled Treasury
    Appropriation/Fund Symbol (TAFS) from an unexpired TAFS is limited
    to one (1) percent of the appropriation in the TAFS. No more than
    one percent of an unexpired TAFS 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 TAFSs and to unexpired
    appropriations for multi-year TAFSs. Antideficiency Act provisions
    continue to apply to cancelled TAFSs. The authority to pay
    obligations against closed TAFSs from one percent of unexpired TAFSs
    cannot be used to exceed the original appropriation. See OMB
    [Circular A-11](http://www.whitehouse.gov/omb/circulars/index.html),
    Section 130.14, *What disbursements can I make during the canceled
    phase?* for more information.

.04 [Allotment Procedures]{.underline}

> Allotments and fund authorizations shall be in writing, addressed to
> specific officials, utilizing forms approved by the Office of Budget.
> In the Department, allotments are issued on Form CD-3, Allotment
> Advice, and states the limits of discretion that may be exercised and
> responsibilities under the Antideficiency Act.
>
> Electronic transmissions may be used, provided adequate internal
> controls (including separate access controls for signatures) are
> present. These documents must identify:

a.  Amount available;

b.  Funding source, e.g., appropriations, reimbursements, etc.;

c.  Time period of availability;

d.  Position title of the official responsible and other agency
    limitations; and

e.  Justification for changes in allotments.

> There may be instances, however, when it is necessary to use more
> rapid means of communication, such as telephone, facsimile, or
> electronic mail. Use of such means should be limited to emergency
> circumstances only. Written authorizations shall be prepared
> concurrently with the less formal communication and shall be
> transmitted promptly to the recipient. Such communications shall be
> documented fully by the recipient and posted to the records. Upon
> receipt, the formal authorization should be attached to the
> documentation used for recording purposes.
>
> .05 [Allottee Responsibility]{.underline}
>
> Allottees shall exercise supervision primarily through (1) the
> approval of organization plans and (2) the approval of commitments,
> obligations, or expenditures chargeable to their allotments.

a.  Sub-allottees (hereinafter described as allottees with respect to
    responsibilities and duties) shall exercise control primarily
    through (1) the approval of operating plans and (2) the approval of
    commitments, obligations, or expenditures chargeable to their
    allotments.

b.  Sub allotments may be made by allottees if essential for effective
    and efficient control of funds. Sub allotments also shall be made
    under procedures prescribed for Form CD-3, Allotment Advice.

c.  Each officer or employee receiving an allotment or sub allotment
    shall be held responsible for restricting obligations or
    expenditures to the amounts and terms specified in the
    contract/purchase order. Obligations incurred or expenditures in
    excess of allotments or sub allotments are considered to be
    violations of the Antideficiency Act.

d.  Allotments may be made on the basis of anticipated receipts,
    reimbursements, or transfer orders (net of items of doubtful
    collectability shown in the accounting records) accepted from
    another Government account, or reimbursement entitlement based upon
    goods and services furnished as authorized by law. All other
    anticipated receipts shall not be allotted until received as an
    advance from the public or the execution of a written agreement
    between the organization unit and local governments where authorized
    by law.

e.  No obligation should be created or outlay made from apportioned
    funds unless such authority has been established by formal allotment
    and the amount available is sufficient to cover the amount of such
    obligation or outlay.

> .06 [Special Situations]{.underline}

a.  Obligations - All transactions meeting the criteria stated for
    obligations in the Supplemental Appropriations Act of 1950, Section
    1311 ([31 U.S.C. Sec.
    1501](http://www4.law.cornell.edu/uscode/31/usc_sup_01_31_08_II_10_15_20_I.html)),
    constitute obligations and shall be recorded as obligations. When an
    agency is authorized by law to incur obligations in advance of, or
    in excess of an appropriation (for example, obligations arising
    under defaulted guaranteed loans or payroll), the obligation must be
    recorded as soon as it arises, even if the available balance is
    insufficient to cover the obligation. For purposes of effective
    financial planning, including funds control, data on proposed
    obligations, (i.e., commitments, reservations as used by program
    activity) shall be systematically accumulated in accounting records
    in advance of their becoming valid obligations. When these
    commitment records are used to prepare official reports on
    obligations incurred, appropriate adjustments must be made to
    conform such data to the amounts representing valid obligations as
    defined by law.

b.  Errors - Those cases caused by errors where the facts indicate that
    no actual over obligation exists are not violations. This is so even
    though the records indicate otherwise. An error does not establish a
    bona fide obligation. An error, however, can lead to an actual
    violation. For example, an overobligation incurred because an error
    led to the belief that sufficient funds were available is a
    violation. Actual violations, even though caused by errors, must be
    reported.

c.  Over Obligations Resulting from Inaccurate Estimates of
    Obligations - Obligations in excess of the actual amount available
    at any given time are prohibited. In the case of some indefinite
    price contracts and similar obligations, it is difficult to
    determine the precise amount of the Government's ultimate liability
    at the time contracts are made. In these cases the allottee is
    responsible for obligating funds to cover the Government's potential
    liability under the contract, and to ensure that sufficient funds
    are available for complete liquidation of such obligations. While it
    is recognized that these cases present many difficulties from a
    control standpoint, the allottee, nevertheless, is responsible for
    ensuring that adequate funds are available in the allotment for
    complete liquidation of such obligations.

d.  Deobligations - The accounting organizations will periodically
    review obligations to ascertain that all those amounts meeting the
    criteria of the Supplemental Appropriations Act of 1950, Section
    1311 ([31 U.S.C. Sec.
    1502](http://www4.law.cornell.edu/uscode/31/usc_sup_01_31_08_II_10_15_20_I.html))
    are recorded. Other amounts should be deobligated. However,
    arbitrary deobligation action is taken at the risk of a future
    violation if subsequent payment or charges should disclose an over
    obligation.

e.  Loan Programs - For loan programs, obligations and disbursements
    will not exceed: (1) the amount of authority made available for loan
    subsidies. Modifications of direct or guaranteed loans will not
    exceed apportioned unobligated balances of subsidy amounts;(2) the
    amount of the credit program supportable by the enacted subsidy,
    whether the subsidy is positive or negative; (3) the amount
    appropriated for administrative expenses; and (4) obligations and
    disbursements may not be incurred against lapsed unobligated
    balances for loan subsidies, except to correct mathematical or data
    errors in calculating subsidy amounts.

# Section 12.0 Withholdings

> .01 [General]{.underline}
>
> Any budgetary resources deferred or proposed for rescission will be
> reported to the Congress in special and supplementary messages and in
> cumulative reports as described in [OMB Circular A-11, Part
> IV](http://www.whitehouse.gov/omb/circulars/index.html), Section 120.
> These actions must be recorded in the bureau's accounting system.
>
> .02 [Rescissions]{.underline}
>
> A rescission is enacted legislation canceling previously enacted
> budget authority before the authority would otherwise lapse.
> Rescissions may be proposed by the President or initiated by a Member
> of Congress. The Impoundment Control Act of 1974 requires that the
> President transmit a special message to Congress whenever he proposes
> an amount for rescission ([2 U.S.C. Sec.
> 683](http://www.law.cornell.edu/uscode/2/683.html)).
>
> .03 [Deferrals]{.underline}
>
> A deferral is any action or inaction by an officer or employee of the
> U.S. Government that temporarily withholds, delays, or effectively
> precludes the obligation or expenditure of budget authority. Amounts
> may be deferred (a) as reserves to provide for contingencies under the
> Antideficiency Act ([31 U.S.C. Sec.
> 1512](http://www4.law.cornell.edu/uscode/31/usc_sup_01_31_08_II_10_15_20_II.html)),
> or (b) for other reasons pursuant to the Impoundment Control Act of
> 1974 ([2 U.S.C. Sec.
> 684](http://www.law.cornell.edu/uscode/2/684.html)) or other laws. All
> deferrals, whether or not reflected on the SF 132, must be reviewed
> and reported from time-to time so that these funds can be made
> available for obligation before they expire.
>
> .04 [Reserves]{.underline}
>
> Reserves may be established under the Antideficiency Act ([31 U.S.C.
> Sec.
> 1512](http://www4.law.cornell.edu/uscode/31/usc_sup_01_31_08_II_10_15_20_II.html))
> solely to (a) provide for contingencies, (b) effect savings made
> possible by or through changes in requirements or greater efficiency
> of operations, or (c) as specifically provided by law. These reserves
> must be recorded in the organization units' accounting system.
>
> .05 [Withholdings under Continuing Resolutions]{.underline}
>
> Continuing resolutions are enacted legislation that provide budget
> authority and other obligational authority for Federal agencies or
> activities to continue operations until a regular appropriation is
> enacted or until a specified date. When a continuing resolution covers
> only part of the year, any Executive withholding, even if proposed for
> the duration of the resolution, will be reported as a deferral
> ([Comptroller General Decision
> B-205053](http://searching.gao.gov/query.html?charset=iso-8859-1&ql=&rf=2&qt=Comptroller+General+decision+B-205053&Submit=Search),
> dated April 23, 1982).
>
> When a continuing resolution covers the full fiscal year, provides
> funds for an activity for the full fiscal year, or covers the
> remainder of the fiscal year, funds withheld may be reported as a
> rescission proposal or deferral, depending on the nature of the
> withholding. Operating plans shall be recorded in the accounting
> system to reflect the continuing resolution.
>
> .06 [Withholdings under Multi-year Apportionments]{.underline}
>
> Where funds are available for obligation beyond the current fiscal
> year, multi-year apportionments may encourage the development of full
> financial plans that reflect a comprehensive approach to programs.
> However, an operating plan must be recorded in the bureau's accounting
> system to reflect the current fiscal year.

# Section 13.0 Anticipated Amounts and Reimbursable Work

> .01 [Anticipated Receipts and Reimbursements]{.underline}
>
> The amount apportioned for any appropriation or fund account that
> includes unrealized reimbursements or other anticipated receipts 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 involved. All officials who receive allotments containing
> reimbursements or anticipated amounts will maintain constant and
> careful oversight to ensure that these are realized or earned as
> planned. The allottee must evaluate the validity or worth of such
> unrealized amounts before requesting them to be used as a basis for
> incurring obligations.
>
> If actual earnings or amounts realized are less than anticipated,
> appropriate funding adjustments shall be made and other appropriate
> action, including reapportionment, shall be taken. The failure to
> realize such amounts does not relieve the designated official of the
> responsibility to request adjustment of allotments so as to bring the
> allotment within the total to be realized. The inclusion of
> anticipated amounts in determining the amounts available for
> apportionment or allotment in no way authorizes the allottee to
> obligate or make expenditures in excess of budgetary resources
> available for obligation.
>
> Obligations and expenditures must not exceed apportionments and
> allotments or exceed budgetary resources available for obligation,
> whichever is smaller.
>
> .02 [Reimbursable Work]{.underline}
>
> In the case of reimbursable work, budgetary resources available for
> obligation from reimbursements are comprised of earned reimbursements
> and unfilled customer 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.
>
> All non-Federal sponsors will make payment in advance of the actual
> cost of the services on an estimated basis. However, an advance
> payment schedule may be established within the reimbursable agreement
> if the total estimated cost will exceed \$50,000 or the length of time
> to complete the work will exceed six (6) months. The head of the
> agency, or his/her designee, may determine, on a case-by-case basis,
> that an advance payment is not feasible.
>
> 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. Throughout
> the year, these amounts are to be adjusted to the extent that orders
> are filled, canceled, or new orders received.
>
> Specific authority may be given by law to include unfilled customer
> orders, not accompanied by an advance, as budgetary resources.

# Section 14.0 Deficiency Apportionments

Apportionments that anticipate the need for a deficiency or supplemental
appropriation under 31 U.S.C. Sec. 1515 will be specifically identified
on the apportionment request (SF 132).

To qualify as a deficiency apportionment, the request must be required
by one of the following:

1.  Laws enacted subsequent to the transmittal of the annual budget for
    the year to Congress;

2.  Emergencies involving human life, the protection of property, or the
    immediate welfare of individuals; or

3.  Specific authorization by law.

When OMB approves a deficiency apportionment and transmits it to
Congress, OMB is merely notifying the Congress that funds appropriated
to date are being obligated at a more rapid rate than previously
anticipated. This notification does not guarantee that the Congress will
approve any part of any associated supplemental requests and does not
authorize the use of any amounts not yet provided.