U.S. Geological Survey Instructional Memorandum
No. APS 2004-12
Issuance Date: June 24, 2004
Expiration Date: September 30 2004
Subject: Working Capital Fund (WCF) – Fee-for-Service Component – Cash Management\
1. Purpose. The purpose of this instructional memorandum is to implement new cash management policies and procedures that strengthen the internal controls for the operation of Fee-for-Service components within the WCF. These new policies and procedures are applicable to all Fee-for-Service components with the exception of the General Services Administration (GSA) Building Delegation Fund component. The GSA Building Delegation Fund component has additional authorities that provide for a different basis of operation.
2. Background. The WCF Fee-for-Service components were established (in accordance with Public Law 101-512) to help U.S. Geological Survey service activities function more efficiently and in a business-like manner. As a WCF component, these activities are freed from many of the worries arising from total dependence on the cycle of annual appropriations. The WCF appropriation has indefinite life from which qualified activities can be given working capital (cash) to operate on a revolving fund basis similar to private industry. The objective of the revolving fund is to provide stability to customer prices, obtain an accumulated operating result of zero, and maintain cash solvency.
The WCF provides a degree of flexibility unlike that of appropriated funds, so it is important that the policies of the fund provide for both solvency of the fund and guard against potential misuse. Procedures must provide the means to fund the recurring operations of the Fee-for-Service accounts while preventing the dumping, or appearance of dumping of unspent appropriated dollars for the express purpose of extending their life. The following policy and procedures are internal controls necessary to provide this assurance.
A. Timing of Payment for Services. To ensure appropriate funding in the Fee-for-Service components of the WCF, an order for service may be paid from appropriated or other funds at the time it is placed provided that the order meets a legitimate, or bona fide, need arising in the current fiscal year. Unobligated funds in a Fee-for-Service component at year-end (carryover) must be supported by a Schedule of Open Orders and Accumulated Balances (Attachment 1). This schedule must accompany the mid-November WCF Out Year Plan and support the Final Ending Unobligated Balance for the immediate past program year.
B. Equipment Replacement and Facilities Investment Funds in WCF Fee-for-Service Components.
(1) The WCF Fee-for-Service components that reserve funds for equipment replacement and/or facilities must document the amount to be used for such activities. The fee-setting schedule must clearly establish that portion of the fee that is for equipment replacement or facilities.
(2) Equipment replacement or facilities investment funds that will meet the criteria for investing in a WCF Investment component, that is, will accumulate balances in excess of $10,000 over two fiscal years with a minimum annual contribution of $5000, must establish an Investment Plan (IP) in the appropriate WCF Investment component and make regular contributions in accordance with the procedures established for that component.
(3) Accumulated equipment replacement and facilities balances that do not meet the WCF Investment criteria will be maintained by the cost center in the WCF Fee-for-Service component and must be documented locally. Documentation must substantiate the balances maintained and will be subject to the annual financial audit. Equipment replacement and facilities funds that remain in the Fee-for-Service component and are part of the year-end carryover must be identified in the Schedule of Open Orders and Accumulated Balances.
C. Operational Readiness Allowance. The WCF Fee-for-Service components may carry a reasonable balance as an allowance to maintain operational readiness in the event of emergency situations, unusual maintenance needs or a temporary reduction in revenues due to a period of continuous lower workload. The test of reasonableness will be measured in terms of the individual Fee-for-Service component's normal business needs. Documentation to substantiate the balance will be maintained by the Fee-for-Service component and will be subject to the annual financial audit. The Operational Readiness Allowance must be disclosed in the Schedule of Open Orders and Accumulated Balances.
4. Procedures. Procedural requirements are established below. A list of Working Capital Fund Frequently Asked Questions is included as Attachment 2.
A. Preparation of the Schedule of Open Orders and Accumulated Balances. The Schedule of Open Orders and Accumulated Balances will be completed by each WCF Fee-for-Service component (except for the GSA Building Delegation component) as of September 30 of each fiscal year. It will be submitted no later than November 15 to the Office of Budget as an attachment to the mid-November Out Year Plan with a copy to the Office of Internal Controls and Quality Assurance. The attached form is to be used until such time as a permanent form is approved. Automated versions of the form are acceptable. Report only those orders which have been placed but not completed and for which funds have been collected. The information required is as follows:
Order No.: A unique number assigned to an order received.
Customer: Customer name or number.
Description: Service ordered.
Date Order Received: Date order was received by the WCF Fee-for-Service component.
Date Work Started: Date work was started by the WCF Fee-for-Service component to fill the order.
Scheduled Completion: Date work is scheduled to be completed.
Fee Collected: Fee collected.
% Not Completed: Record amount of work remaining to be completed in percentage terms.
Carryover: Calculate this item by multiplying the Fee Collected by the % Not Completed.
Operational Readiness Allowance: Report those amounts that have been retained in the WCF Fee-for-Service component that provide funding for a continuation of operations in the case of emergencies, unusual maintenance needs, or a temporary reduction in revenues due to a period of continuous lower workload.
Equipment Replacement and Facilities Funds Not Invested in a WCF Investment Component: Report those amounts that have been retained in the WCF Fee-for-Service component for equipment replacement or facilities. Do not report amounts redirected to a WCF Investment component.
WCF Component: Name of reporting WCF Fee-for-Service component.
Total This Page: Total of all entries on the page.
Total All Pages: Total of all entries in the report. This number will compare to the carryover amount reported on the Out Year Plan for the immediate past program year.
B. Redirecting Equipment Replacement and Facilities Funds to a WCF Investment Component.
(1) A key purpose of the WCF is to plan for long-term capital investments and accumulate the required funds over several fiscal years. Many of the fees established for the WCF Fee-for-Service components include a factor for equipment replacement or facilities operations. The accumulation of these funds in a WCF Fee-for-Service component may give the appearance of excess funding for that component. The WCF Investment components, e.g., the Equipment Investment and Facilities Investment components, were established to accumulate long-term capital investment funds. Therefore, all accumulations of equipment replacement and facilities funds that meet the requirements to establish an IP within a WCF Investment component (that is, annual deposits will exceed $5,000 per year over two or more fiscal years) must be redirected to an IP. These redirections will be accomplished by the Office of Accounting and Financial Management's Accounting Operations Branch (AOB) using a cash receipt (CR) document to charge the WCF Fee-for-Service component and credit the WCF Investment component.
(2) No later than July 15, 2004, WCF Fee-for-Service components will compute current accumulations of equipment replacement and facilities investment funds; evaluate the amount of future service fees that are predicated upon equipment replacement and facilities; and determine if an IP in a WCF Investment component is warranted. For those instances where an IP is warranted, WCF Fee-for-Service components will establish an IP and request redirection of the accumulated equipment replacement or facilities funds into that IP.
(3) No later than July 20, 2004, new IPs and redirection requests must be submitted through the servicing Fiscal Services office to AOB with a copy to the Office of Budget. Subsequent redirections will be made in accordance with the schedules established in the IP. The initial redirection of funds from the WCF Fee-for-Service component to an Investment component will be immediately available for obligation even though they are to be placed into a new IP. Subsequent redirections will be subject to all operating guidelines as is appropriate for the respective WCF Investment component.
(4) Chapter 3 of 335-6-H (WCF Handbook) provides detailed instructions for the preparation of IPs. Fiscal Services staffs are prepared to assist with any issues or questions that may arise.
(signed) Carol F. Aten
Carol F. Aten Chief, Office of Administrative Policy and Services