No. APS 2003-13
Issuance Date: May 1, 2003
Expiration Date: April 30, 2004
Archive Date: October 23, 2008
Subject: Monthly Review of Unliquidated Obligations and Accruals
Reference: Superseded by APS 2004-09.
1. Purpose. This Instructional Memorandum (IM) prescribes the procedures for a monthly review of current and prior year unliquidated obligations and accruals. This IM replaces Office of Financial Management (OFM) IM 2000-06.
2. Background. Obligations are incurred when orders are placed, contracts awarded, services received, goods delivered or other similar transactions occur for which payment will be made later than the date the obligation is incurred (e.g., the date a contract is awarded). Accruals record expenses in the period in which they were incurred rather than the period in which funds were disbursed (e.g., a bill is paid). Depending upon the type of transaction, obligations and accruals are liquidated manually or automatically when a payment is made.
Federal agencies are required to report obligation balances (including accruals) to the Department of the Treasury (Treasury) and the Office of Management and Budget (OMB). Within the Department of the Interior (DOI), the reports occur at the bureau level. In addition, each bureau’s Director’s representative must certify that obligation balances reflect proper existing obligations and that expenditures are supported by proper obligations of funds.
The fiscal year (FY) 2002 audit included findings that USGS obligation balances were not accurate. The audit identified numerous instances of bills being paid without liquidating the recorded obligations or accruals. In some instances, funds, other than the funding supporting the recorded obligation or accrual, was used to pay expenditures because obligations or accruals were not referenced when payment occurred. In other instances, although recorded obligations and accruals were referenced, the amounts paid were less than the recorded obligations or accruals. Had the obligations and accruals been accurately referenced and liquidated, funding would have been available for other purposes, in the case of current year funds; or, in the case of prior year obligations or accruals, prior year funds would have been available for valid prior year expenses.
Accurate accruals and obligations provide cost center managers with a “true” picture of the financial health of their cost center, show the true funding availability, and allow managers to make sound financial decisions.
In order to effect requisite improvements, the bureau is requiring cost centers to conduct a monthly review of current and prior year unliquidated obligations and accruals. In addition, to strengthen internal controls, the bureau is requiring cost center managers to submit a quarterly certification that the monthly reviews were conducted.
3. Policy: Each cost center shall perform a detailed monthly review of current and prior year unliquidated obligations and accruals. A quarterly certification that the monthly reviews were completed will be submitted to the servicing Fiscal Service office in accordance with USGS IM APS 2003-14.
4. Procedures for Reviewing Outstanding Obligations: OFM produces and distributes three Federal Financial System (FFS) reports that list open documents (unliquidated obligations and accruals). These reports are:
A. Report 285 - Status of Open Documents. The 285 report provides a listing by cost center of outstanding open documents, including both unliquidated obligations and an outstanding Accrued Expenditure Balance (RC documents). The 285 is a month-end report, which is usually generated on the last day of the month. Because the data included in the report comes directly from FFS tables, the report shows amounts as of the date the report is run rather than as of an accounting period.
(1). Source of 285 Report Data. The 285 report obtains the dollar amounts from three FFS tables:
(a). OBLL, Purchase Order Accounting Line Inquiry Table
(b). RCLA, Receiver Accounting Line Inquiry Table
(c). TOLT, Travel Order Inquiry Table
(2). 285 Report amount fields:
(a). Current Amount Obligated or Receiver Accrued Expenditure. The “Current Amount Obligated” field comes from the “PO Line Amt” field on OBLL or the “Obligation” field on TOLT. The “Receiver Accrued Expenditure” field comes from the “Accrual Amount” field on RCLA.
(b). Total Expended to Date. The “Total Expended to Date” field comes from the “Expended Amt” fields on OBLL and TOLT and the “Vouchered Amount” field on RCLA.
(c). Outstanding Obligated Balance. The “Outstanding Obligated Balance” field is the amount shown in the “Outstanding Amt” field of the FFS OBLL table. The “Outstanding Amt” is the difference between the “PO Line Amt” less “Closed Amt” on the FFS OBLL table.
(d). Outstanding Receiver Accrued Expenditure Balance. The “Outstanding Receiver Accrued Expenditure Balance” field is the difference between the “Accrual Amount” less the “Closed Amount” on the FFS RCLA table.
(e). Closed Amount. The “Closed Amount” field is the “Closed Amount” field on OBLL, TOLT and RCLA.
(3). 285 Report Data Retention Timeframe. Normally documents will be retained on the 285 report for 2 months after the document shows:
(a). The same dollar amounts in “Curr Amt Oblig,” “Total Expended to Date” and “Closed Amt” with zero in “Outstanding Obligated Balance”, OR
(b). The same dollar amounts in “RC Accrued Exp,” “Total Expended to Date,” and “Closed Amt” with zero in “Outstanding RC Accrued Exp Balance.”
B. Report 268 - Detailed Status of Current Year Transactions. The “Detailed Status of Current Year Transactions” is a report generated monthly, which provides detailed transactions by budget object class on individual transactions processed during the current month against current year project accounts. The information displayed in the report is the beginning balance by budget object class, the detailed individual transaction data by budget object class, and ending balance by budget object class. There are summary total categories for each account. The 268 report is helpful in identifying the specific transactions that were processed against a particular document, i.e., invoice, modifications, and payments.
C. Report 268-P - Detailed Status of Prior Year Transactions, Report 268-P. The “Detailed Status of Prior Year Transactions” is a report generated monthly, which provides detailed information by budget object class on individual transactions processed during the current month against prior year project accounts. The report is sorted by budget fiscal year and fund type with a summary cost center total. The information displayed in the report is the beginning balance of the project account, the detailed individual transaction data by budget object class, and an ending balance of the project account. The 268-P report is helpful in identifying the specific transactions that were processed against a particular document, i.e., invoice, modifications, and payments.
5. Procedures for liquidating obligations and accruals: Once an invoice is received and payment is to be made, the obligation or accrual number must be referenced in FFS for that specific payment. By referencing the obligation or accrual, the outstanding balance or the accrued balance will be liquidated based on the amount of payment. As described in sections 4.B.and 4.C., this information can be reviewed and verified by analyzing the 268 series reports.
A. Payment to Federal Agencies. If payment is to be made to another Federal agency through the IPAC system, please ensure that all interagency agreements have the necessary information provided for billing purposes. USGS IM OFM 2003-12 provides information on preparing interagency agreements. Once a product or service has been received for that particular obligation, review the 268 series report to ensure the payment has been properly reflected against the obligation or accrual. If the payment transaction has not been reflected, contact the vendor to find out the status of the payment. If the payment has been improperly applied to another obligation for an IPAC payment, the OFM Accounts Payable Section must be promptly contacted.
6. Procedure for deobligating obligations and accruals: Open obligations and accruals must be analyzed to determine the need to deobligate the outstanding balance, especially prior year obligations. As described in Section 4.A., the 285 report – Status of Open Documents provides a list of all the documents with an outstanding balance. Once the determination has been made that a particular obligation or accrual will have no future expenditures, the document must be deobligated.
A. Deobligation of Training Orders. Training orders are automatically obligated through the Training Management System. These transactions are obligated in FFS as MO transactions. Deobligation of training orders must be submitted to OFM, Accounts Payable Section for deobligation. Normally, training orders cannot exceed 1 fiscal year. To deobligate a training order, the requestor may submit a written request to:
B. Deobligation of Remote Data Entry (RDE) Obligations or Accruals. Obligations or Accruals that have been entered by RDE in FFS with transaction codes 8o, 8a, 8c, or 8b must be deobligated by RDE.
C. Deobligation of OFM entered Obligations. To request a deobligation for a document entered by OFM (transaction code MO in FFS) OR for prior year obligations previously entered by RDE users with a transaction code 4M or #O (such as 4O and 7O) with the exception of 8O, the requestor must submit a request to OFM. The following information must be included in the request: FFS document reference number, vendor name, object class, account number, and amount of deobligation requested for each item to be deobligated. The requestor may either:
(1). Submit a written request to:
(2). Send an e-mail request to firstname.lastname@example.org.
D. Deobligation of Permanent Change of Station (PCS) travel authorizations. Travel PCS obligations entered by RDE as 8T transactions must be deobligated by RDE. To deobligate all other PCS transactions (TO transactions), a request must be submitted to OFM which includes: the FFS document reference number, traveler’s name, object class, account number, and amount of deobligation requested. Typically PCS documents should not be more than three years old. The requester may either:
(1). Submit a written request to:
(2). Send an e-mail request to email@example.com.
E. Deobligation of Open Market Purchase Orders and General Services Administration (GSA) Schedule Orders. Requests for deobligation of open market purchase orders and GSA schedule orders must be submitted to the Chief, Accounts Payable Section, OFM, with the exception of the current fiscal year and the immediate prior fiscal year. For those exceptions, a requisition requesting the deobligation and citing the order number must be provided to the procurement office that issued the award, unless other arrangements (such as a memorandum request) are made with the Chief of Small Purchases at those offices.
F. Deobligation of Contractual and Federal Assistance Awards. To request
a deobligation for contractual and Federal assistance awards (transaction code
M$ in FFS and transaction code MO for prior year obligations) discussions with
both the Contracting Officer administering the award and the program official
who has been designated as the Contracting Officer’s Representative should
precede the request. If it is determined that the excess funds can be deobligated,
a requisition requesting the deobligation should be
forwarded to the Contracting Officer administering the award. In addition, a copy of the request must be submitted to:
Chief, Office of Acquisition and Grants
MS 205 National Center
Reston, VA 20192
Carol F. Aten
Chief, Office of Administrative Policy and Services