327.1 - Funds Control

3/6/98

OPR: Director's Office

1. Purpose. The purpose of this chapter is to define policy, functions, and responsibilities in the execution of the budget and clarify basic funds control principles and concepts. The chapter includes an administrative control of funds policy which provides the procedures designed to restrict, to the amount available, obligations and expenditures against each appropriation or fund account. This will enable management to determine responsibility for overobligation and overdisbursement of appropriations and other administrative subdivisions of funds. Finally, the chapter provides the policy for dealing with violations of the Antideficiency Act as well as violations of limitations imposed by the USGS, including reporting requirements.

2. Authority.

A. 31 U.S.C., Money and Finance

(1) Sec. 1341-1342,1349-1351, 1511-1519, Antideficiency Act, as amended.

(2) Sec. 1101, 1104-1108, 3324, Budget and Accounting Act, 1921, as amended.

(3) Sec. 1501-1502, Supplemental Appropriations Act of 1950.

(4) Sec. 1112, 1531, 3511-3512, 3524, Budget and Accounting Procedures Act of 1950.

(5) Sec. 1535, Economy Act.

B. 2 U.S.C. 681-688 Public Law 93-344, Title X.

C. Budget Enforcement Act of 1990.

D. Office of Management and Budget (OMB) Circulars A-34 and A-25.

E. 31 U.S.C. 97, Fees and Charges for Government Services and Things of Value.

F. USGS permanent appropriation authority.

3. Scope.All funding sources and organizational entities are subject to the provisions of this chapter.

4. Definitions. Definitions are listed in alphabetical order in Appendix A.

5. Responsibility and functions of individuals. USGS has the initial and fundamental responsibility to assure that its application of public funds adheres to the terms of the pertinent authorizations and appropriation act, as well as any other relevant statutory provision. This responsibility includes establishing and maintaining appropriate accounting and internal controls. This section identifies those individuals or positions responsible under the Antideficiency Act Provisions for all USGS funds and their function within the budget execution process, if applicable.

A.Director. This position is recipient of all funding appropriated and apportioned to the USGS. The overall funds control and Antideficiency Act reporting for the bureau has been delegated to the Associate Director for Operations.

B.Associate Director for Operations. This position has overall funds control and Antideficiency Act reporting responsibility for the bureau in the capacity of Chief Financial Officer. The Associate Director for Operations, through the Chief, Office of Financial Management, and the Chief, Program Operations Office, is responsible for identifying, reporting, and following up on violations of the Antideficiency Act and any administrative violations.

C.Chief, Program Operations Office (POO). Is responsible for oversight of bureau funds control, entering the apportionment into the accounting system, the allotment of the approved apportioned funds by activity to the applicable office or division, and review of the divisions' execution of the allotted funds.

D.Chief, Office of Financial Management (OFM). This position is responsible for the following: establishing appropriate funds control limits in the financial system; timely and accurate entry of obligating documents and/or expenditure documents into the financial system, and distributing project costs to customers on a monthly basis; development and implementation of policies and procedures to control, record, and report funding and financial transactions of the USGS; verifying the reliability of the data on the reports; and the timely production and distribution of reports.

E.Divisions. The head of each division, or their designees, will be responsible for their budget activity allotted funds, and authorizing funds to activities or projects, preparing annual operating plans, ensuring budget execution is within planned perimeters, and for establishing specific funds internal control procedures within each division. The division chiefs and heads of offices are responsible for verifying the accuracy of the data on the financial reports for their organizations.

6. Action Prohibited by the Antideficiency Act.

A.Overobligation or overexpenditure of an appropriation, apportionment, or allotment of funds. This is any case where an employee of USGS makes or authorizes an expenditure or creates or authorizes an obligation against any funds in excess of the amount available in the account. This also includes obligation or expenditure in excess of a congressionally imposed limitation contained in an authorization or appropriation act restricting the amount for a particular program or activity.

(1) Appropriated funds have a six year life cycle. Funds are "current" during the appropriated fiscal year (FY) and "expired" for the next five years available only for valid obligations and expenditures associated with that fiscal year (i.e. charge originated in FY 1995 would be chargeable to expired FY 1995 funds). At the end of the sixth year the funds are canceled, and any remaining funds are returned to the Treasury (i.e., at the end of FY 1997, FY 1992 funds are canceled -- FY 1992 funds were current in FY 1992, expired in FY 1993, 1994, 1995, 1996, 1997 and then no longer available after FY 1997). Any obligation or expenditure associated with a canceled FY Appropriation is charged against the current fiscal year's funds and will cause an Antideficiency Act violation if an obligation/expenditure or accumulated obligations exceed the current appropriated funds by 1 percent.

(2) Reimbursable authority is covered under the Antideficiency Act requirements, to the extent that unrealized reimbursement would create an overobligation in appropriated funds. Reimbursable funds are not appropriated, but are apportioned with our appropriation. Reimbursable estimates may change during the year. Because of the dynamic nature of reimbursable funds, internal controls should be established for division-specific procedures to ensure transactions related to reimbursable customers do not cause a program or activity's allotment to be exceeded.

B.Contract or obligation in advance of an appropriation. This is any case where an employee of the USGS has involved the bureau in a contract or other obligation for the payment of money for any purpose in advance of appropriations made for such purpose.

C.Overobligation or overexpenditure of other administrative subdivisions of funds. Generally overobligation of other administrative subdivisions of funds are violations of the Antideficiency Act only when it causes overobligation or overexpenditure of an allotment, apportionment or appropriation.

D.Violations involving subapportionments to allocation accounts. Violations involving allocation accounts (funds transferred from other Federal agencies) will be reported through OMB to the President by USGS through the Federal agency administering the parent account.

7. Penalties. Any employee of the USGS who violates the Antideficiency Act will be subject to appropriate administrative discipline. Depending on the severity of the violation, may consist of any or a combination of the following:

A. A letter of reprimand or censure for the official personnel record of the employee.

B. An unsatisfactory performance rating.

C. A transfer to another position.

D. Suspension from duty without pay.

E. Removal from office.

F. A fine of not more than $5,000, imprisonment for not more than 2 years, or both.

8. Reporting Requirements. Antideficiency Act violations must be reported to the President and the Congress, through OMB, in the form of a letter, signed by the USGS Director, as required by OMB Circular No. A-34. All violations must be reported immediately upon discovery. Any individual with knowledge of a possible violation has the responsibility to report it. Action taken to correct the cause of the violation does not eliminate the violation; it still must be reported.

9. Relationship of accounting and fund control systems. The USGS financial system provides full accounting to support provisions of the Administrative Control of Funds policy. The USGS financial system reports are produced on a monthly basis, except for more frequent productions during critical periods (e.g., year-end closeout). These management reports serve a variety of needs, providing both detailed and summary information for funding, costs (commitments, obligations, expenditures/payments, and burden), billings, and collections. The data contained in these reports support financial information reported to external entities, e.g., the Department of Treasury and OMB. The reports themselves are intended to provide management with a means to maintain control of appropriated funds through the following areas.

A. Controlling. The financial system reports allow the exercise of administrative control over the availability and obligation of funds.

B. Recording. The financial system reports provide the ability to monitor the recording of commitments, unliquidated obligations, and expenditures for the proper amounts against the proper accounts and funding sources.

C. Analyzing. Rates of obligation and the unobligated balances available are analyzed by using financial systems reports.

D. Programming and Budgeting. Divisions use the financial system reports to analyze obligations by object classification, thereby providing cost data for programming and budgeting, and for preparing and revising operating plans.

E. Billings and Collecting. Finally, financial system reports are used to account for detailed information relative to billings and collections of reimbursable agreements.

10. Apportionment. Apportionment of funds is required for appropriated funds, reimbursements, and estimated carryover amounts. Allocation account funds received from other Federal agencies are not apportioned to the USGS. Any appropriation or fund which is apportioned may be subdivided administratively (allotted/authorized) within the limits of such apportionments. Apportionment procedures are intended to prevent obligation or expenditure of funds in a manner which would require a deficiency or supplemental appropriation, to achieve the most effective and economical use of funds made available, to provide for contingencies, and to effect savings.

A. The initial apportionments for the USGS are based on appropriations from Congress and the most current reimbursable estimate from the divisions. Under current OMB guidance, estimated amounts may be changed to actuals at any time without further action from OMB.

B. Increases in appropriated funding are not available for allotment or obligation until notification by OMB through the Department.

C. When an apportionment is approved by OMB, the POO will provide OFM and divisions with the amount of approved budget authority. This information will show the amounts apportioned, distributed by budget activity, and type of fund. Funds do not become available for allotment or obligation until after they have been approved by OMB.

11. Allotments, Sub-allotments and Authorizations. The functions and purpose of allotments, sub-allotments, and authorizations are to distribute apportioned funds to employees of USGS who are authorized to incur obligations within a specified amount during the fiscal year pursuant to an appropriation or other statutory provision.

A. Restrictions.

(1) The sum of allotment amounts issued shall not exceed the apportionment.

(2) The sum of sub-allotment amounts shall not exceed the allotment amount.

(3) The sum of authorized amounts shall not exceed the sub-allotment amount.

(4) Allotments or other administrative subdivisions shall be fixed in amount and changed only when authorized by the Chief, POO.

(5) Congressional restrictions contained in the appropriation acts are carried with the allotment.

(6) Spending controls in the financial system are at the allotment and sub-allotment levels.

B. Procedures. Allotment and internal reporting systems shall be designed so that responsibility for budget control is placed at the highest practical organizational level consistent with effective and efficient management. The Department of the Interior (DOI) has designated this to be the budget activity level specified in the Appropriations Committee report.

(1) The distribution of allotments by budget activity is provided to and approved by the Director of Budget, Department of the Interior. The budget activity distribution showing appropriated and reimbursable funding is submitted to the Director of Budget by the Chief, POO, in conjunction with the apportionment. Allotments of allocation account funds received from other Federal agencies are not subject to apportionment by USGS but are included in the Distribution of Available Funds Table.

(2) The POO inputs the apportionment and allotments into the financial system providing spending controls; authorizations and obligations cannot be entered until these amounts are approved and entered into the system.

(3) Divisions are notified of allotments by budget activity and suballotment by division with the Distribution of Available Funds Table informing them of amounts made available for obligation and fund type.

(4) As reimbursable programs change, requests for allotment adjustments should be submitted to the POO either with a revised Operating Plan or a memorandum explaining the revision and additional authority will be granted.

12. Reprogramming of Funds. Reprogramming guidelines are established by the Appropriations Committee and monitored by the DOI. These guidelines, reflecting the intent of Congress, are published in the official Committee reports and represent limits to the bureau's authority to change the purpose to which appropriated funds are applied. Reprogramming guidelines are not directly subject to the Antideficiency Act. Reprogramming is an administrative violation, not an Antideficiency Act violation.

A. Congressional Direction. In the 1998 Congressional reports, the following policy is in effect: The threshold for reprogramming is standardized for all agency programs, projects and activities at $500,000 or 10 percent. Reprogramming includes the reallocation of funds from one budget activity to another. In cases where either Committee report displays an allocation of an appropriation below the activity level, that more detailed level shall be the basis for reprogramming. A reprogramming shall also consist of any significant departure from the program described in the agency's budget justifications.

B. Reprogramming Guidelines.

(1) Reprogramming is made only when an unforeseen situation arises and then only if postponement of the project or activity would result in actual loss or damage.

(2) Any project or activity deferred through reprogramming will not later be accomplished by means of further reprogramming; but funds should be requested for the deferred project or activity through the regular appropriations process.

(3) Reprogramming should not be employed to initiate new programs or to change allocations specifically denied, limited, or increased by the Congress in an Act or report.

(4) Reprogramming proposals submitted to the Committee on Appropriations for prior approval shall be considered approved after 30 calendar days if the Committee has posed no objection.

(5) Any proposed reprogramming exceeding $500,000 or resulting in an increase or decrease of more than 10 percent annually in an affected program, must be submitted to the Committee on Appropriations in writing prior to implementation.

(6) All reprogramming shall be reported to the Committee on Appropriations quarterly and shall include cumulative totals.

13. Division Annual Operating Plans. The annual operating plan is an essential part of the planning and programming functions of management. Consolidated plans for each division will be submitted in accordance with the guidelines provided by the POO.

A. Annual operating plans will include the divisions' anticipated use of all funds. Divisions will complete a separate operating plan for each Working Capital Fund (WCF) Component which are submitted along with the annual operating plans. Further information and procedures for the WCF can be found in the WCF Survey Manual Chapter 335.6 and Handbook, 335-6-H.

B. Completed annual operating plans are submitted to the POO and signed by the Division Chiefs or their designee. Every fiscal year annual operating plans will be prepared and revised according to the following schedule:

Initial Plan - Late August

Revised Plan - Mid April

Revised Plan - Mid July

C. The POO will review plans and arrange budget execution and program reviews with the Associate Director for Operations and Division Chiefs. These reviews will be coordinated with OFM.

14. Reimbursable work. Reimbursable work is USGS services or supplies provided to other Federal agencies (OFA's) (SM 500.3), non-Federal agencies including private organizations (SM 500.2), and State and local governments (SM 500.1).

A. The Economy Act authorizes agencies to enter into mutual agreements to obtain supplies or services by interagency acquisition. The USGS may receive orders for goods and services if the following determination requirements apply:

(1) amounts are available;

(2) use of an interagency agreement is in the best interest of the Government;

(3) the USGS is able to provide or procure the ordered goods or services; and

(4) the supplies or services cannot be obtained as conveniently or economically by contracting directly with a private source.

B. The Economy Act may not be used by an agency to:

(1) Circumvent conditions and limitations imposed on the use of funds; that is, another Federal agency could not extend the availability of their appropriation by transferring the funds to USGS; or

(2) Make acquisitions conflicting with any other agency's authority or responsibility.

C. If the Economy Act order requires that work be performed by the servicing agency, the determination requirement (see above paragraph A, items 1-3) shall also include a statement that at least one of the following circumstances is applicable:

(1) the acquisition will appropriately be made under an existing contract of the servicing agency, entered into before placement of the order, to meet the requirements of the servicing agency for the same or similar supplies or services;

(2) the servicing agency has capabilities or expertise to enter into an agreement for such supplies or services which is not available within the requesting agency; or

(3) the servicing agency is specifically authorized by law or regulation to purchase such supplies or services on behalf of other agencies.

D. The Economy Act requires that goods or services be provided at cost, meaning that one agency cannot make a profit from another agency.

E. Reimbursements are offsetting collections credited to the appropriation account. Authority to collect receipts from non-Federal sources must be contained in the appropriation act or enabling legislation language.

F. The Economy Act may not be used to make acquisitions conflicting with any other agency's authority or responsibility (for example, that of the Administrator of General Services under the Federal Property and Administrative Service Act).

G. All reimbursable work must be preceded by a fully executed or bilaterally signed interagency agreement.

H. Specific authority to enter into an inter-/intra-agency agreement must exist. In the absence of other specific statutory authority, the legal authority to collect reimbursements from other Federal Government agencies is the Economy Act.

15. Deficiency apportionment. Apportionments that anticipate the need for a deficiency appropriation or a supplemental under 31 U.S.C. 1515, will be specifically identified on the apportionment request.

A. To qualify as a deficiency apportionment, the request must be required by (1) laws enacted subsequent to the transmittal to Congress of the annual budget for the year, (2) emergencies involving human life, the protection of property, or the immediate welfare of individuals, or (3) specifically authorized by law.

B. The approval of a deficiency apportionment by OMB and its transmittal to Congress merely advises 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.

16. Handbook. The procedures for day-to-day funds control, account codes, and financial system reporting are provided in Handbook 327-1-H, Budget Execution and Finance Handbook.

APPENDIX A

Allocation. The amount of obligation authority transferred from one agency, bureau, or account that is set aside in a transfer appropriation account (also known as an allocation account) to carry out the purposes of the parent appropriation or fund.

Allotment. A delegation of authority by the Director, USGS, which allows the designated officials to incur obligations within the scope and terms of the delegation.

Antideficiency Act. Legislation enacted by Congress to prevent the incurring of obligations or making of expenditures (outlays) in excess of amounts available in appropriations or funds; to fix responsibility within an agency for the creation of any obligation or the making of any expenditure in excess of the apportionment or reapportionment, or in excess of other subdivisions established, pursuant to 31 U.S.C. 1517; and to assist in bringing about the most effective and economical use of appropriations and funds.

Apportionment. A distribution made by OMB of amounts available for obligation in an appropriation or fund account into amounts available for specified time periods, programs, activities, projects, object classification codes, or combinations thereof. The apportioned amount limits the obligations that may be incurred.

Appropriation. An authorization by an Act of Congress that permits Federal agencies to incur obligations and to make payments out of the Treasury for specified purposes. (Note terminology distinction: Congress appropriates, OMB apportions, receiving agency allots, and the allotees authorize.)

Authorization. Distribution below the sub-allotted level.

Budget Activity. Approved Congressional budget structure.

Budget Authority. The authority provided by Federal law to incur financial obligations that will result in outlays or expenditures.

Budgetary Resources. Amounts available to enter into obligations in a given year.

Expenditures. With respect to provisions of the Antideficiency Act (31 U.S.C. 1513-1514) and the Congressional Budget and Impoundment Control Act of 1974 (2 U.S.C. 622 (I)), a term that has the same definition as outlay.

Limitation. A restriction on the amount of funds that can be obligated or committed for a specific purpose (i.e., the USGS Federal State Cooperative program limitation specifies that funds may only be used for cooperation with State and local governments). While limitations are most often established through Appropriation Acts, they can also be established through authorizing legislation or by the agency.

Obligations are binding agreements (e.g. purchase orders, contracts, etc.) that will result in outlays, immediately or in the future. Budgetary resources must be available before obligations can be incurred legally. Certifications and records will be kept by the agency in a form that makes audits and reconciliations easy (31 U.S.C. 1108).

Outlays. The issuance of checks, disbursement of cash, or electronic transfer of funds made to liquidate a USGS obligation. Outlays during a fiscal year may be for payment of obligations incurred in prior years (prior year obligations) or in the same year. Outlays therefore, may consist in part from unexpended balances of prior-year obligations and current year obligations.

Reimbursements. A sum that is received by the Federal government as a repayment for commodities sold or services furnished either to the public or to another government account and that is authorized by law to be credited directly to offset outlays against specific appropriations and fund accounts. Divisions are responsible for the accurate projection and reporting of anticipated reimbursable income to the Program Operations Office and for the collection of that income.

Reprogramming. Movement of funds within an appropriation account, from one budget activity or project to another, for purposes other than those outlined in the budget justifications and expressed as Congressional intent in the Appropriations Bill reports. Reprogramming guidelines have been provided in Committee reports and provide for notification of the Subcommittees in advance of reprogrammings. OMB approval is required in advance of submitting reprogramming notices to the Subcommittees.

Sub-Allotments. A level below the allotment providing funds to the division, who may further authorize to projects or sub-allot to other divisions to perform the specified work within a project.