ECONOMY ACT

EFFECTIVE FISCAL 2022

ECONOMY ACT

EFFECTIVE FISCAL 2022

ECONOMY ACT 

REIMBURSABLE BUY/SELL ACTIVITY

EFFECTIVE FISCAL 2022

PREPARED BY:

GENERAL LEDGER AND ADVISORY BRANCH

FISCAL ACCOUNTING OPERATIONS

BUREAU OF THE FISCAL SERVICE

U.S. DEPARTMENT OF THE TREASURY

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# Background

The Economy Act of 1932, as amended, 31 U.S.C. § 1535, permits Federal Government agencies to purchase goods or services from other Federal Government agencies or other major organizational units within the same agency. An Economy Act purchase is permitted only if: (1) amounts for the purchase are actually available, (2) the purchase is in the best interest of the Government, (3) the ordered goods or services cannot be provided by contract from a commercial enterprise, i.e., the private sector, as conveniently or cheaply as could be by the Government, and (4) the agency or unit to fill the order is able to provide or get by contract the

ordered goods or services. 

The Federal Acquisition Regulations (FAR), 48 CFR 17.5 provides further requirements for Economy Act agreements. The FAR provides that an order cannot be placed under the Economy Act if a more specific statutory authority exists. Purchases pursuant to the Economy Act are not exempt from the requirements of 48 CFR 7.3, “Contractor Versus Government Performance.”

Thus, Office of Management and Budget (OMB) Circular No. A-76 applies to Economy Act agreements. Economy Act agreement must achieve full cost recovery, and there is no law permitting a waiver of this full cost recovery requirement. Full cost recovery includes direct and indirect costs. 

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Further, the Economy Act does not allow a Federal agency or unit to receive a profit when providing goods or services.

The FAR states that Economy Act orders must include (1) a description of the supplies or services required; (2) delivery requirements; (3) a funds citation; (4) a payment provision; and (5) acquisition authority as may be appropriate. 

Section 20.10 of OMB Circular No. A-11 states “When a reimbursable agreement with another Federal account is accompanied by a cash advance, you may disburse to pay obligations associated with that advance. However, if you are authorized to incur

obligations against customer orders from other Federal accounts without an advance, the order establishes obligational authority only and you may not disburse the account into a negative position (see section 145.2 on Antideficiency Act violations).”

Based on the period of availability of the ordering agency Treasury Appropriation Fund Symbol (TAFS), section 130.9 of A-11 includes a table detailing periods of availability of the performing agency TAFS. The OMB Circular No. A-11 can be found at:

Circulars | The White House

Many Economy Act transactions will be processed in G-Invoicing.   G-Invoicing is not an accounting system, but rather a central repository to support the accounting of Buy/Sell transaction events.  Please reference the G-Invoicing Program Guide for Basic Accounting and Reporting Scenario (FY 2022) for further information on G-Invoicing.

The U.S. Standard General Ledger - USSGL Implementation Guidance (treasury.gov)

For further information on Buy/Sell Intragovernmental Transactions (IGT) please reference TFM Volume 1, Part 2, Chapter 4700, Appendix 8.

I TFM PART 2 CHAPTER 4700: FEDERAL ENTITY REPORTING REQUIREMENTS FOR THE FINANCIAL REPORT OF THE UNITED STATES GOVERNMENT (treasury.gov)

Listing of USSGL Accounts Used in This Scenario 

This scenario portrays reimbursable Economy Act transactions in which the ordering agency and performing agency both have annual TAFs.   Transactions highlight the following points.

· Reimbursable operations under the Economy Act between two annual TAFS

· Budget authority provided through offsetting collections

· Performing activity receives orders with and without advances 

· Availability of funds as applied to reimbursable agreements between ordering and performing entities

· Reduce unfilled customer orders to obligation balance due to an expiring appropriation of the ordering entity, in accordance with the Economy Act

Performing fund activity is shown in all transactions and in the accompanying reports and financial statements.  Ordering fund transactions are shown only when applicable to the fund’s activities with the performing fund.  Therefore, no reports or financial statements are displayed for the ordering fund.  Also, it is presumed that the ordering fund uses general fund appropriations.

The Economy Act has two parts. Without Advances and With Advances. It is important that agencies determine which part of the scenario applies to them. “Economy Act (Without Advances)” begins on the following page and the  “Economy Act (With Advances)” begins on page 32.

Economy Act (Without Advances)– Year 1

Economy Act (Without Advances)– Year 1

Economy Act (Without Advances)– Year 1

Economy Act (Without Advances)– Year 1

Economy Act (Without Advances)– Year 1

Economy Act (Without Advances)– Year 1

Economy Act (Without Advances)– Year 1

Economy Act (Without Advances)– Year 1

Economy Act (Without Advances)– Year 1

Economy Act (Without Advances)– Year 1

Economy Act (Without Advances)– Year 1

Economy Act (Without Advances)– Year 1

Economy Act (Without Advances)– Year 1

Economy Act (Without Advances)– Year 1

Economy Act (Without Advances)– Year 1

PRE-CLOSING ADJUSTING ENTRIES

The following Trial Balance and Financial Statements are presented for the Performing Fund only.

Economy Act

Pre-Closing Trial Balance

 Year 1 (Without Advances)

Economy Act (Without Advances) Financial Statements - Year 1

The following  Financial Statements are presented for the Performing Fund only.

Economy Act (Without Advances) Financial Statements - Year 1

The following  Financial Statements are presented for the Performing Fund only.

Economy Act (Without Advances) Financial Statements - Year 1

Economy Act (Without Advances) Financial Statements - Year 1

Economy Act (Without Advances) Reclassified Financial Statements – Year 1:

Note: Effective FY 2021, the Reclassified Balance Sheet is the same as the Balance Sheet. Therefore, the Reclassified Balance Sheet is not presented in this scenario. 

Economy Act (Without Advances) Closing Entries– Year 1

Economy Act (Without Advances) Closing Entries– Year 1

Economy Act (Without Advances) Closing Entries– Year 1

Economy Act

Post-Closing Trial Balance

Economy Act (With Advances) – Year 1

Economy Act (With Advances)– Year 1

Economy Act (With Advances)– Year 1

Economy Act (With Advances)– Year 1

Economy Act (With Advances) – Year 1

Economy Act (With Advances) – Year 1

Economy Act (With Advances) – Year 1

PRE-CLOSING ADJUSTING ENTRIES

Please note:  The following Trial Balance and Financial Statements are presented for the Performing Fund only.

Economy Act

Pre-Closing Trial Balance

 Year 1 (With Advances)

The following  Financial Statements are presented for the Performing Fund only.

Economy Act (With Advances) Financial Statements - Year 1

Economy Act (With Advances) Financial Statements - Year 1

Please note:  The Financial Statements are presented for the Performing Fund only.

Economy Act (With Advances) Financial Statements - Year 1

The following Financial Statements are presented for the Performing Fund only.

Economy Act (With Advances) Financial Statements - Year 1

Economy Act (With Advances) Reclassified Financial Statements – Year 1:

Note: Effective FY 2021, the Reclassified Balance Sheet is the same as the Balance Sheet. Therefore, the Reclassified Balance Sheet is not presented in this scenario. 

Economy Act (With Advances) Closing Entries– Year 1

Economy Act (With Advances) Closing Entries– Year 1

Economy Act (With Advances) Closing Entries– Year 1

Economy Act

Post-Closing Trial Balance

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