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U.S. Geological Survey Instructional Memorandum

No. APS 2004-09

Issuance Date: March 8, 2004

Expiration Date: March 7, 2005

Archive Date: October 24, 2008

Subject: Monthly Review of Unliquidated Obligations and Accruals

Reference: This IM has been replaced by Financial Operating Procedures Handbook Chapter 18 Required Review and Certification.

Instructions: This Instructional Memorandum replaces IM no. APS 2003-13

1. Purpose. This Instructional Memorandum (IM) prescribes the procedures for a monthly review of current and prior year unliquidated obligations and accruals. The IM also establishes a requirement for each cost center to document during its quarterly certification why an obligation with no activity in the last 12 months is still necessary.

2. Definition. Obligation means a legally binding agreement that will result in outlays, immediately or in the future. When you place an order, sign a contract, award a grant, purchase a service, or take other actions that require the Government to make payments to the public or from one Government account to another, you incur an obligation. Moreover, you are required to maintain certifications and records showing that the amounts have been obligated. 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.

3. Background. 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, the Deputy Chief Financial Officer must certify that obligation balances reflect proper existing obligations and that expenditures are supported by proper obligations of funds.

The timely expenditure of obligated funds is a fundamental principle of sound financial management. Excess undelivered orders may serve as an indicator that a manager may not be effectively using allocated funds. Recurring reviews of undelivered orders, resulting in cancellation or deobligation of invalid obligations, increases funds available for no-year appropriations and for annual appropriations if the obligation to the annual fund occurred in the current fiscal year.

A deobligation cancels or reduces a previously recorded obligation. In general, organizations and officials responsible for initiating the recording of obligations are also responsible for promptly initiating deobligation actions when the original obligation needs to be reduced or cancelled, or when the requirements for recording obligations noted above are no longer met.

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.

4. Policy. Each cost center shall perform a detailed monthly review of all current and prior year unliquidated obligations and accruals. A new report requirement is established with this IM for Cost Centers to submit a quarterly report to the Fiscal Services offices for obligations over 12 months old with no activity*, indicating why the obligations and accruals are still necessary (see Figure 1, Cost Center Certification of Open Obligations.)

* For purposes of this IM, activity includes all transactions recorded against an obligation except year-end accruals (i.e. RC transactions).

5. Process: During the monthly review process, open obligations and accruals must be analyzed to determine the need to deobligate the outstanding balance, especially prior year obligations. Examples when unliquidated obligations should be promptly deobligated include:

  1. The initial obligation is found to be invalid;
  2. Correction is necessary due to bookkeeping errors or duplicate obligation; the project or contract was cancelled;
  3. The obligation was liquidated by closing the contract, grant or purchase order in an amount less than the amount of the original obligation without checking the "final" flag in FFS;
  4. A previously recorded estimate is reduced; and,
  5. The unliquidated obligation represents a transportation claim which has exceeded the three year statute of limitations as provided for in 31 U.S.C. 3726.

To facilitate the monthly report, the Office of Accounting and Financial Management (OAFM) has established a new FFS Report 285X, Obligations/Accruals Needing Review. The report lists by Region and Cost Center the outstanding amount of obligations when:

The 285X report lists these outstanding balances because these amounts are more likely than not in need of review and possible deobligation. The report will be run concurrently with the 285 Report and be available in control-D. In addition, OAFM will distribute a copy of the 285X Report in an Excel format to the Headquarters and Regional Fiscal Services Chiefs sorted by Region and Cost Center 5 business days after the close of the month.

The review of the 285X Report is not a substitute for a thorough review of outstanding obligations and accruals noted below in sections 4 and 5. In accordance with the requirements of this IM, the 285X report does not list any activity that occurred as a result of RC transactions.

Once the determination has been made that a particular obligation or accrual will have no future expenditures, the document must be deobligated. Any adjustments that result from these reviews should be recorded prior to the end of the reporting period either quarterly or annually.

If the obligation is invalid, deobligate the obligation with appropriate supporting documentation. Appropriate documentation includes a contract modification or a paid voucher annotated and initialed to reflect a discount taken. If an official document is not used to initiate the transaction, a separate, signed justification, in sufficient detail to fully explain the rationale shall be prepared, signed and retained as support.

For transactions reducing obligations, such as those to correct data entry errors, the office initiating the transaction shall ensure there is an adequate audit trail to document the rationale for the transaction and relevant documents shall be initialed by the staff member entering the transaction.

Where a deobligation is made to close out a contract based upon a final voucher, a contracting officer shall annotate the voucher or other document to indicate approval. Retain the quarterly documented review for reference and audit. Submit the list of outstanding obligations, any adjustments that result from these reviews and certification that the monthly reviews were completed to the servicing Fiscal Service office in accordance with USGS IM APS 2003-14.

6. Procedures for Reviewing Outstanding Obligations: OAFM 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.

7. Procedures for reviewing the payment history of obligations: A purchase order, contract, or other obligating document may have numerous payments made against it. The following search path can be used to determine when the last payment was made against the obligation. You will need to know the Purchase order number and contract number. To review the obligation information, use the following:

DXRF is a cross reference table that will list all documents related to the Obligation. It will point backwards to all requisitions that preceded the obligation and forward to all payments made against the obligation. (DXRF cross references various other documents also).

PVHT and PVLT contain detailed information on the payment including the scheduled payment dates. Leaf to IVCH to obtain the check number of any payments if necessary. OBLH and OBLL contain detailed information on the obligation including the amounts obligated, closed, and outstanding. OBLL contains the accounts and object classes charged with the obligation.

8. 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.

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 APS 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 OAFM Accounts Payable Section must be promptly contacted.

9. 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.

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 OAFM, 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:

(1) Chief, Accounts Payable Section
Office of Accounting and Financial Management
MS 270 National Center
Reston, VA 20192
ATTN: Brenda Fulk, OR

(2) Send an e-mail request to bfulk@usgs.gov.

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, or 8B must be deobligated by RDE.

C. Deobligation of OAFM entered Obligations. To request a deobligation for a document entered by OAFM (transaction code MO in FFS) OR for prior year obligations previously entered by RDE users with a transaction code 8C, 4M or #O (such as 4O and 7O) with the exception of 8O, the requestor must submit a request to OAFM. 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:

Chief, Accounts Payable Section
Office of Accounting and Financial Management
MS 270 National Center
Reston, VA 20192
ATTN: Brenda Fulk, OR

(2) Send an e-mail request to bfulk@usgs.gov.

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 OAFM 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:

Chief, Travel Section
Office of Accounting and Financial Management
MS 270 National Center
Reston, VA 20192
ATTN: James O'Brien, OR

(2) Send an e-mail request to gs_help_pcs@usgs.gov.

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, OAFM, 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.

(signed) Carol F. Aten
Chief, Office of Administrative Policy and Services

Figure 1 - Cost Center Certification of Open Obligations


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U.S. Department of the Interior, U.S. Geological Survey, Reston, VA, USA
URL: http://www.usgs.gov/usgs-manual/im/archive/aps-2004-09.html
Contact: APS, Office of Policy and Analysis
Issuing Office: Office of Administrative Policy and Services
Content Information Contact: Paul McEnrue, 703-648-7670, pmcenrue@usgs.gov
Last modification: 11-Jan-2013@16:38 (KLM)
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