U.S. EPA's ADMINISTRATIVE CONTROL of APPROPRIATED FUNDS OMB APPROVED RELEASE 3.2 February 4, 2008 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 TABLE OF CONTENTS CHANGE CONTROL LOG ACRONYM LIST INTRODUCTION CHAPTER 1 : THE FEDERAL BUDGET PROCESS, LAWS, & GUIDANCE I. OVERVIEW OF THE FEDERAL BUDGET PROCESS AT EPA A. Budget Planning and Formulation of NPM Budgets B. OMB Submission 1 . OMB Review and Passback C. President's Budget D. Congress 1 . House and Senate Review and Mark-Up 2. Congressional Conference Action 3. Enacted Appropriation a. Continuing Resolution/ Agency Shutdown b. Supplemental Appropriations E. OMB Apportionments F. 1 . EPA Allotments 2. Advices of Allowance (AOA) II. FEDERAL LAWS AND GUIDANCE A. Principles of Federal Appropriations Laws 1 . Appropriations as to Purpose 2. Appropriations as to Time a. The Unexpired Phase b. The Expired Phase c. The Cancelled Phase 3. Appropriations as to Amount B. Budget and Accounting Procedures Act (1921) C. Economy Act (1 958) D. Congressional Budget Impoundment and Control Act (1974) E. Federal Manager's Financial Integrity Act (FMFIA) (1982) F. Chief Financial Officers Act (CFO) (1 990) G. "M" Acct Legislation H. Government Performance and Results Act (GPRA) (1993) I. OMB Circular A-1 1 (Part 2)/Preparation & Submission of Budget Est. J. OMB Circular A-1 1 (Part 4)/lnstructions on Budget Execution PAGE 7 8 11 13 13 14 14 14 15 15 15 16 16 16 16 17 18 18 19 19 19 21 23 24 24 24 24 25 25 26 26 27 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 PAGE III. EPA LEGISLATION 28 A. Authorizing Legislation 28 1. Clean Air Act (CAA) 1970 28 2. Federal Water Pollution Control Act (FWPCA) of 1948 28 Clean Water Act (CWA) 1972 Water Quality Act of 1987 (WQA) Beaches Environmental Assessment & Coastal Health Act of 2000 3. Marine Protection, Research, and Sanctuaries Act (MPRSA) 29 4. Safe Drinking Water Act (SDWA) 1974 29 5. Solid Waste Disposal Act 30 Resource Conservation and Recovery Act (RCRA) 1976 Hazardous and Solid Waste Amendments (HSWA) of 1984 6. Comprehensive Environmental Response, Compensation, 30 and Liability Act (CERCLA) 1980 Superfund Amendments and Reauthorization Act of 1986 (SARA) Emergency Planning and Community Right-To-Know Act (EPCRA) Small Business Liability Relief and Brownfields Revitalization 7. Energy Policy Act of 2005 31 8. Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) 1972 31 9. Food Quality Protection Act (FQPA) of 1996 31 10. Toxic Substances Control Act (TSCA) of 1976 32 11. Radon Abatement Act (RAA) of 1988 32 12. National Environmental Policy Act (NEPA) (1969) 32 13. Pollution Prevention Act (PPA) of 1990 33 14. Oil Pollution Act (OPA) of 1993 33 15. Inspector General Act of 1978 33 B. Appropriations Acts 34 1. One-Year Appropriations 34 2. Multi-Year Appropriations 34 a. Environmental Program & Management (EPM) 34 b. Science & Technology (S&T) 35 c. Office of Inspector General (OIG) 35 3. No-Year Appropriations 36 a. Hazardous Substance Response Trust Fund (Superfund) 36 b. Leaking Underground Storage Tanks Trust Fund (LUST) 36 c. Buildings and Facilities (B&F) 36 d. Oil Spill Liability Trust Fund 37 e. State and Tribal Assistance Grants (STAG) 37 CHAPTER 2: ROLES AND RESPONSIBILITIES FOR FUNDS CONTROL 38 I. PARTICIPANTS 38 A. Assistant Administrators (AAs) 38 National Program Managers (NPMs) Responsible Planning and Implementation Officers (RPIOs) B. Regional Administrators (RAs) 39 3 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 c. D. E. F. G. H. 1. J. K. L. M. N. 0. CHAPTER 3: Senior Resource Officials (SROs) & Assit. Regional Administrators(ARAs) Senior Budget Officers (SBOs) Regional Comptrollers Regional Budget Officers Allowance Holders (AHs) Funds Control Officers (FCOs) Originator Approving Official Obligating Officials Office of the Chief Financial Officer (OCFO) 1 . Office of Planning, Analysis, and Accountability (OPAA) 2. Office of Budget (OB) 3. Office of Financial Management (OFM) 4. Office of Financial Services (OFS) 5. Office of Enterprise Technology and Innovation (OETI) Financial Management Officers (FMOs) Accounts Payable Certifying Officers & Disbursing Officers Office of General Counsel (OGC) BUDGET EXECUTION PROCESS 1. ACCOUNT CODE STRUCTURE AT EPA A. B. C. 6-Field IFMS Account Code 1 . Budget Fiscal Year Field (BFY) 2. Fund (Appropriation) Field (APPR) 3. Organization Field (ORG) IFMS Account Code Expansion/Utilization (Figure 2) 4. Program Field - Program Results Code Field (PRC) 5. Site/Project Field 6. Cost Organization Field Appropriation Number (Treasury Account Symbol) Object Classes 1 . OMB Object Classification Codes 2. EPA Object Classification Codes 3. EPA Sub-Object Classification Codes II. OPERATING PLAN CONTROL AND MANAGEMENT A. B. Advice of Allowances 1 . Nature of Allowances 2. Advice of Allowance Issuance 3. Adhering to Advices of Allowance Reprog ramming 1 . Purpose and Definition 2. General Reprogramming Restrictions 4 PAGE 39 40 41 41 43 43 44 45 45 46 46 47 47 47 47 48 48 49 50 50 50 50 50 51 53 54 55 57 57 58 58 58 58 60 60 60 60 61 61 61 62 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS III. IV. 3. Reprogramming Limitations (Ceilings and Floors) a. Ceilings b. Floors 4. IFMS Reprogramming Process C. Carryover of Unobligated Balances D. Reimbursable Allowances COMMITTING AND OBLIGATING APPROPRIATED FUNDS A. Reviewing and Approving Funding Documents B. Recording Commitments 1 . Funds Availability Check 2. Entering Documents into IFMS 3. Unfunded Procurement Requests for Planning Purposes C. Monitoring Funds after Commitment 1. IFMS Tables 2. Financial Data Warehouse (FDW) Reports 3. Orbit Reports D. Recording Obligations E. Authorizing Payments F. Reconciliation G. Resolving Issues with Commitments and Obligations H. Prevalidation of Funds I. Overruns/Recoveries J. Ratification of Unauthorized Procurements K. Recertification of Funds 1 . When Funds Do Not Have to be Recertified 2. When Funds Do Have to be Recertified L. Centrally Managed Allowances MANAGEMENT REPORTING AND END-OF-YEAR CLOSEOUT A. Unliquidated Obligations B. End-of-Year Close Out CHAPTER 4: SPECIAL SUBJECT ITEMS 1. SPECIAL SUBJECT ITEMS A. Violations: Creation, Reporting, & Penalties 1 . Antideficiency Act (ADA) Violations 2. EPA Administrative Control of Funds Violations B. Operating Under a Continuing Resolution C. Payroll Management and Tracking/PeoplePlus D. Working Capital Funds Services E. U.S. Government Purchase Card Program F. Ordering GSA Office Supplies G. "Administrative" vs. "Programmatic" 1. Philosophy 5 02/04/08 PAGE 64 64 65 65 66 67 70 70 71 71 72 72 73 74 75 75 75 76 77 78 79 80 83 85 85 86 88 90 92 95 95 95 95 96 97 97 99 100 105 106 106 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 H. I. J. K. L. EXHIBITS: 2. Special-Use Facilities 3. Examples of Administrative and Programmatic Costs Direct Implementation Additional Grants information Split Funding with Multiple Appropriations Layoffs Between Appropriations Fees and Fee Programs 2520-2-1 Funds Control Relationships in EPA 2520-2-2 FCO Designation Letter and FCO Designation Form 2520-2-3 Servicing Finance Offices (SFO) 2520-3-1 EPA Appropriation Fund Codes / Treasury Symbols 2520-3-2 Object Class Relationships 2520-3-3 IFMS Budget Hierarchy 2520-3-4 How to Write a GOOD Reprogramming Justification APPENDICES: 2520-A Budget Terms and Definitions 2520-B Checklist of Good Fund Control Practices 2520-C Suggested FCO Job Qualifications & Training 2520-D Frequently Asked Questions (FAQs) FREQUENTLY ASKED QUESTIONS: A. REPROGRAMMINGS B. CONTRACTS C. GRANTS D. TRAVEL E. GENERAL PAGE 110 113 119 120 120 122 123 124 125 126 128 129 132 131 132 133 134 152 154 155 157 160 161 162 163 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 CHANGE CONTROL LOG INDEX OF MAJOR REVISIONS / NEW MATERIAL Update - Introduction Re-description of the Budget Process Update - Advice of Allowance (further defined) Added Authorization - Energy Act Added Roles and Responsibilities - Regional Budget Officers Update - General Reprogramming Restrictions Update - Reprogramming Limitation (Ceiling and Floor) Update - Carryover of Unobligated Balances Update - Reimbursable Allowances (for SF Special Accounts) Update - Overruns/Recoveries (for No-Fear Act) Update - Recertification of Funds Update - Unliquidated Obligation Update - U.S. Government Purchase Card Program Additional Grants Information - Direct Implementation Added - Q&A on using appropriated funds to pay for meals at a agency sponsored meetings and conferences. Added - Q&A explanation on how to make changes to a PRC PAGE(s) 11-12 13-16 18,61 31 41-42 62-63 64-65 66-67 68 80-81 85-87 90-91 101-105 117-118 163 165 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 ACRONYMS USED in this DOCUMENT ACRONYM AA ADA AH AHRC ALLT AOA ARAs B&F BAS BFY BOC BOCT BPA CAA CERCLA C-FMC CFO CJ CMA CO Comp.Gen CORs CPARS CPS CR CWA CWSRF DAA DCN DWSRF DXRF EASY EPAAR EPCRA EPM FAN FAR FASA FCO FDW FIFRA FMFIA FMO FQPA FSOC FTE FTTA MEANING Assistant Administrator Anti-Deficiency Act Allowance Holder Allowance Holder Responsibility Center Allowance Table (IFMS) Advice of Allowance Assistant Regional Administrators Building and Facilities (Appropriation) Budget Automation System Budget Fiscal Year Budget Object Class Budget Object Class Table (IFMS) Blank Purchase Agreement Clean Air Act Comprehensive Environmental Response Compensation Liability Act (1980) Cincinnati Financial Management Center Chief Financial Officer Congressional (Budget) Justification Centrally Managed Allowances Contractual Obligation Comptroller General (a.k.a the Government Accountability Office) Contract Officer Representative Combined Payroll Redistribution and Reporting System Contract Payment System Continuing Resolution Clean Water Act (1972) Clean Water State Revolving Fund Deputy Assistant Administrator Document Control Number Drinking Water State Revolving Fund Document Cross Reference Table (IFMS) Electronic (Invoice) Approval System Environmental Protection Agency Acquisition Regulation Emergency Planning and Community Right-to-Know Act (1986) Environmental Programs and Management (Appropriation) Fixed Account Number Federal Acquisition Regulation Federal Acquisition Streamlining Act (1994) Funds Control Officer Financial Data Warehouse Federal Insecticide, Fungicide Act (1972) Federal Manager's Financial Integrity Act (1982) Financial Management Office Food Quality Protection Act (1996) Finance Sub-Object Class (code) Full-Time Equivalent Federal Technology Transfer Act ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 FWPCA GAO GC GPRA IAG ICMS IFMS IGMS I PA LIMT LUST LV-FMC MO NOA NPM OBLH OBLL ODN Op Plan ORBIT PC&B PGMT PPA PPGs PR PRC PROJ R&D RA REQL RMDS RPIO RTP-FMC S&T SAIN/SALC SARA SASP SBO SDWA SF SFO SIRMO SOC SRF SRO STAG SUSF TA TSCA WAM WCF Federal Water Pollution Control Act Government Accountability Office General Counsel Government Performance Results Act (1993) Inter-Agency Agreement Integrated Contracts Management System Integrated Financial Management System Integrated Grants Management System Inter-personnel Act Limit Reference Table (IFMS) Leaking Underground Storage Tanks (Appropriation) Las Vegas Financial Management Center Miscellaneous Obligation New Obligational Authority National Program Manager Obligation Line Header Table (IFMS) Obligation Line Table (IFMS) Obligating Document Number Operating (Budget) Plan OCFO Reporting Business Intelligence Tool Personnel Compensation and Benefits Program Reference Table (IFMS) Pollution Control Act (1990) Performance Partnership Grants Purchase Request Program Results Code Project Reference Table (IFMS) Research and Development Regional Administrator Requisition Line Table (IFMS) Resource Management Directive System Resource Planning and Implementation Office Research Triangle Park (North Carolina) Financial Management Ctr Science and Technology (Appropriation) Sub-allowance Inquiry Table (IFMS) Superfund Amendments and Reauthorization Act (1986) Sub-allowance Spending Control Table (IFMS) Senior Budget Officer Safe Drinking Water Act (1974) Superfund (Appropriation) Servicing Financial Office Senior Information Management Officer Sub-Object Class Code (also known as FSOC) State Revolving Fund Senior Resource Official State and Tribal Assistance Grants (Appropriation) Suspense File (IFMS) Travel Authorization Toxic Substances Control Act Work Assignment Manager Working Capital Fund ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 WQA Water Quality Act (1987) 10 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 INTRODUCTION The control of funds in the federal government is governed by statutes and implemented by directives from the Office of Management and Budget (OMB), the General Accountability Office (GAO), the U.S. Treasury, and the Congress. This document presents information on EPA's funds control principles and policies and details their legal basis. These provisions apply to all organizations, appropriations, and funds at EPA. We have included detailed procedures for controlling funds where possible or referenced the annual guidance or organization where the latest procedures can be obtained. Although the main audience for this material is the EPA Allowance Holders (AHs) and their Funds Control Officers (FCOs), it is a useful reference for all members of the resource community. Resource management is everyone's responsibility. EPA receives several Congressional appropriations which provide for both general and specific areas of activity. Congressional appropriations are provided for a particular, purpose, time and amount. These three characteristics are regulated through restrictions such as the), the Necessary Expense Rule (purpose) Bona Fide Needs Statute (time) and the Anti-Deficiency Act (ADA) (amount). The ADA also governs timing - prohibiting obligations in advance of appropriations. The complex nature of EPA's missions and the diversity of its programs have a major impact on procedures developed for controlling EPA's funds. Since funds control is conducted throughout Headquarters offices, as well as in the various Regional Offices and laboratories, standard policies and procedures on how to control funds are necessary to ensure that EPA does not violate the Congressional intent of the appropriations provided and EPA's managers do not violate the U. S. statutes. To that end, 31 U.S.C. 1514 requires the head of each Agency, subject to approval of the President, to prescribe by regulation a system of administrative control of funds. The approval of fund control regulations has been delegated to the Director of the OMB. OMB approval is intended to ensure that the objectives of financial plans are met and do not violate the Antideficiency Act (ADA). OMB Circular A-11 (Part 4) "Instructions on Budget Execution" (formerly OMB Circular A-34) provides government-wide guidance and a checklist for Agency use in preparing funds control regulations for approval by OMB. This document, Administrative Control of Appropriated Funds (Resources Management Directives System (RMDS) Chapter 2520), will be submitted to OMB as EPA's revised documentation of its Funds Control Regulations and system. This Funds Control Regulation: A. establishes policy with regard to the administrative control of funds, B. prescribes a system for positive administrative control of funds designed to restrict obligations and expenditures against each appropriation or fund account to the amount available therein, C. restricts both obligations and expenditures from each appropriation or fund account to the lesser of the amount of apportionments made by OMB or the amount available for obligation an/or expenditure in the appropriation or fund account, D. enables the Administrator to determine responsibility for overobligation and overdisbursement of appropriations, apportionments, statutory limitations, allotments, and other administrative subdivisions, as well as violations of limitations imposed by the Agency, and E. provides procedures for dealing with violations of the Antideficiency Act (ADA) as well as violations of limitations imposed by the Agency, including reporting requirements. 11 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 F. discusses agency administrative control of funds policies that apply to revolving funds, management funds, and trust funds, including those that are not apportioned. In addition to OMB Circular A-11, this document is designed to also compliment OMB Circular A-123, "Management Responsibilities for Internal Controls", which provides guidance on using the range of tools at the disposal of agency managers to achieve desired program results and meet the requirements of the Federal Managers' Financial Integrity Act (FMFIA) of 1982. The FMFIA encompasses accounting and administrative controls. Such controls include program, operational, and administrative areas as well as accounting and financial management. Management has a fundamental responsibility to develop and maintain effective internal controls. The proper stewardship of Federal resources is an essential responsibility of agency managers and staff. Federal employees must ensure that Federal programs operate and Federal resources are used efficiently and effectively to achieve desired objectives. Programs must operate and resources must be used consistent with agency missions, in compliance with laws and regulations, and with minimal potential for waste, fraud, and mismanagement. Readers are encouraged to visit http://intranet.epa.gov/ocfo/perform/integrity.htm which provides links to an overview of the Federal Manager's Financial Integrity Act, and OMB Circular A-123, as well as key OCFO quality assurance guidance memos. This directive is effective immediately and supersedes all previous versions. This document will be accessible online in HTML and/or PDF formats as soon as it is finalized. The PDF format contains word and phrase search capabilities that are useful in locating specific funds control content. Supplemental guidance regarding the financial management of selected areas, such as travel, and selected appropriations, such as those derived from the Superfund and LUST Trust Funds, can be found in other sections of the RMDS 2500 series. The entire series, as well as all other OCFO policy documentation can be accessed online at the following URL address: http://intranet.epa.qov/ocfo/policies/policies.htm. 12 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 CHAPTER 1: THE FEDERAL BUDGET PROCESS. LAWS. & GUIDANCE I. OVERVIEW of FEDERAL BUDGET PROCESS at EPA General knowledge of the federal budget process is necessary to set the stage for learning detailed budget execution policies and procedures. The following overview briefly describes the Executive and Congressional budget processes. FEDERAL BUDGET PROCESSES FORMULATION EXECUTION I NPMs I AGENCIES (EPA) PRESIDENT I CONGRESS: NPM BUDGETS (Section A) 1 OMB SUBMISSION (Section B) OMB REVIEW and PASSBACK, APPEAL, AND RESOLUTION (Section B. 1) PRESIDENT'S BUDGET (Section C) 1 HOUSE & SENATE — + CONFERENCE MARK-UP ACTION (Section D. 1) (Section D. 2) 'l . OBLIGATIONS BY ALLOWANCE HOLDERS t EPA ALLOWANCES (Section F.2) t EPA ALLOTMENTS (Section F. 1) OMBAPPORTIONMENTS (Section E) —+ ENACTED APPROPRIATION (Section D.3) FIGURE 1 13 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 These activities correspond to the steps shown in FIGURE 1. A. BUDGET PLANNING and FORMULATION of NATIONAL PROGRAM MANAGER (NPM) BUDGETS: (March - August) The budget formulation process at U.S. Environmental Protection Agency (EPA) has evolved a great deal. As EPA seeks to present its budget more effectively to Congress and to the public, it has moved toward linking budgetary resources to measurable environmental goals and outcomes. Building such a "results-based" budget requires the integration of planning and budgeting in all phases of budget development. The following information is as a "quick overview" of the budget formulation process. The first step in the process is one of outreach from EPA to stakeholders, state, and tribal organizations to discuss their concerns and priority areas that will move them toward achieving goals and meeting statutory requirements. This input is then factored into the discussions and decisions at an Annual Planning Meeting. The focus of this meeting is for the Administrator and the Agency's senior leadership to review and prioritize major policy changes that will move the Agency closer to achieving its environmental goals contained in the EPA's Strategic Plan. Based on discussions and agreements reached at the Annual Planning Meeting, budget policy and technical guidance is issued to the Agency for the development of its budget. The guidance memo developed by the Office of Budget (OB), with input from the Office of Planning, Analysis, and Accountability (OPAA) includes the framework and formats each office should use in developing their budget requests. Each Assistant Administrator (AA), plus General Counsel (GC) and the Inspector General (IG), serve as National Program Managers (NPMs). These Agency executives work with the senior managers in their program offices and with the Regions to formulates a budget request which reflects implementation of the Agency's Strategic Plan and the needs of Headquarters and the Regional offices. The budget is formulated following guidance issued by the Administrator. AAs submit their requests to the OCFO. The OCFO reviews and analyzes the requests and works togetherto make recommendations to the Agency's senior managers. The recommendation takes the form of a "budget straw proposal" and includes amended budget decisions. The Agency's senior managers then meet at a Budget Forum annually in July to discuss and make recommendations on the proposed budget decisions. The Administrator's final decisions are communicated to the Agency along with technical instructions for preparation and submission of the OMB budget. B. OMB SUBMISSION: (September-November) AAs, based on the Administrator's final decisions, prepare their portion of the Agency's budget request to OMB and submit them to Office of Budget for consolidation into a single document. OMB Circular A-11, issued annually, provides the technical guidance for preparation of the Agency's budget request, which is due to OMB usually on the first Monday after Labor Day (13 months in advance of the fiscal year). 1. OMB REVIEW, PASSBACK, APPEAL, and RESOLUTION: (November-December) OMB, after an initial period of review, holds hearings with selected AAs to justify their requested resource levels. OMB also usually requests additional program and budget information from the Agency. After further review of the Agency's budget submission, that includes a "Director's Review", OMB informs the Agency about their decisions on EPA's budget request. This is commonly called the "OMB Passback". 14 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 After receiving the "OMB Passback", the Agency generally has 3 days to prepare and submit an appeal to OMB. If there is an appeal, a second Passback process occurs until OMB and EPA agree on the final policy and budget decision. This stage is complete after all outstanding issues between the Agency and OMB have been resolved. Issues that cannot be resolved between the Agency and OMB may be appealed to the President. C. PRESIDENT'S BUDGET: (December - February) EPA's budget request is then produced in a specific format for Congressional submission known as the "Congressional Justification" (CJ). This format, which includes summaries and special analyses, displays resource levels for three fiscal years (prior year, current year, and budget year) including explanations of change and narrates the strategy, accomplishments, and budget request for each of the Agency's programs. Each NPM submits their portion of the CJ in final form to the OB, which prepares supplemental schedules, exhibits, final documents, and data. EPA combines the "Congressional Justification" with the Agency's Annual Plan to produce one document entitled: The Annual Plan and Budget. The document is first reviewed by OMB, then after being approved, it is printed and awaits distribution as the detailed justification to EPA's portion of the annual President's budget (PB) request to Congress. Throughout this preparation period, there is a continuous exchange of information among the various federal agencies, OMB, and the President, including revenue estimates and economic outlook projections from the Treasury Department (TD), the Council of Economic Advisers, and the Departments of Commerce and Labor. During the President's Budget preparation, all information, correspondence, and data are strictly confidential, and remain confidential until the President's Budget is officially released to the public. The OMB, which is charged with broad oversight, supervision, and responsibility for coordinating and formulating a consolidated budget submission, to Congress produces numerous documents for the President's Budget; the most noteworthy is the Budget Appendix. On, the 1st Monday in February, the President submits his annual budget to Congress as the Administration's budget request for the next fiscal year starting on the following October 1. EPA's request for its annual budget is submitted to the Interior, Environment, and Related Agencies Appropriations Sub-Committees of the House of Representatives and the Senate. Most agencies schedule a press conference on the day of the President's Budget submission and release their portion of the President's Budget request to the general public. D. CONGRESS (February - September) 1. CONGRESSIONAL (HOUSE and SENATE) REVIEW and MARK-UP: (February-August) Congress holds hearings on the President's Budget. This review is done primarily by the House and Senate Appropriations Interior Subcommittees even though authorizing committees also hold hearings. EPA officials testify on the requested levels and respond to questions received from Congressional Committees. The House Interior Appropriations Subcommittee then conducts a hearing to "mark-up" the PB request. A full House Appropriations Committee "mark-up hearing" follows. The House Committee "mark-up" goes to the House Floor for a final vote. Traditionally, once the House passes an appropriation bill, the Senate follows the same process as the House. Both the House and Senate Appropriation Reports Subcommittee issues detailing each house's mark-ups to the proposed PB. This information is distributed to the AAs and Regional Administrators (RAs) who follow the steps of the legislative process and make the changes (add-ons, reductions, etc.) to their programs. 15 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Through the Congressional appropriations process, Congress prescribe restrictions on how EPA uses its funds, including travel ceilings, expense ceilings, (e.g. Superfund Management Cap) and reprogramming limitations. These will be discussed in more detail in subsequent sections of this directive. 2. CONGRESSIONAL CONFERENCE ACTION: (September) There are normally variations in the Senate and House appropriation bills as well as differences in accompanying reports. A Conference Committee with representatives from both Houses of Congress is then formed. It is the function of the Conference Committee to resolve all differences, but the full House and then Senate (in that order) must also vote to approve the Conference Committee Report. If the appropriations bill is rejected by either the full House or Senate, the process must reconvene at the Conference Committee level again. 3. ENACTED APPROPRIATION: (October) Following the House and Senate's passage of the appropriation bill, the bill is "enrolled" and sent to the President for signature or veto. The Congressional Budget Act requires completion of the government- wide process by October 1. Currently, there are 12 regular appropriations acts which could be passed and enacted annually. In recent years, Congress has more frequently enacted Omnibus appropriations. EPA's appropriations are part of the Department of the Interior, Environment, and Related Agencies Appropriations Act. However, additional appropriation decisions and restrictions applicable to all Federal agencies (e.g., annual payroll cost of living increases) are included in the Financial Services and General Government Appropriations Act. Late Congressional action on this later appropriations act may delay development of EPA's Enacted Budget. All Congressional changes in the Enacted Budget must be reflected in the Agency's Operating Plan (Op Plan). Generally, there are adjustments that must be made, as well as specific directions that must be followed, such as funding "earmarks" or "add-ons." In some cases, the Administrator may determine in the development of the Op Plan that available resources need to be redirected to meet emerging unfunded priorities. Making these decisions and implementing these changes result in the development of the Agency's Enacted Operating Plan, which is then submitted first to OMB for review and then to Congress for information. a. CONTINUING RESOLUTIONS / OMNIBUS APPROPRIATIONS/SHUTDOWN: If an Agency's annual appropriations act is not enacted by the start of the new fiscal year (October 1), the Congress will usually pass one or more Continuing Resolutions (CR) which allows agencies to continue operations for specific periods of time. Given the additional time, Congress ultimately passes the agency's annual appropriations act, a CR through the end of the fiscal year, or an Omnibus Appropriations Act covering all agencies whose individual appropriations acts have not been enacted. In the absence of either an annual appropriations act or a CR, the Agency faces a shutdown situation since EPA lacks the authority to spend any new money. However, if any authority and funds are still available for obligation, then a shutdown forthose activities funded by that appropriation does not occur. b. SUPPLEMENTAL APPROPRIATIONS: During the fiscal year, the President may submit to Congress proposed deficiency and supplemental appropriation requests that he/she decides are necessary because of laws enacted after the submission of the President's Budget or that are in the public interest (e.g., war, natural disasters). Deficiency and supplemental appropriations that the agencies want to propose themselves are submitted to the President through OMB fortransmittal by OMB to Congress. 16 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 E. OMB APPORTIONMENTS: (October) Following Congressional enactment of appropriations legislation (including continuing resolutions and deficiency or supplemental appropriations), the Office of Budget (OB) Director at EPA, requests apportionments from OMB. Apportionment requests for carryover balances, recovery authority, and reimbursable authority do not require legislation but are included in the apportionment request. In accordance with OMB Circular A-11, Part 4 instructions for the Apportionment and Reapportionment of funds, OMB Standard Form, (SF-132) or a letter apportionment format is submitted by EPA to make these requests. OMB reviews the request and when satisfied, OMB signifies approval by signing the document(s). The reason that funding provided by Congress requires apportionment by OMB before it can be accessed by agencies is explained as follows: Subsection (b) of the Antideficiency Act (ADA), 31 U.S.C. 1513, requires that all appropriations be administratively apportioned by the Director of the OMB to ensure their expenditure at a controlled rate which will prevent deficiencies from arising at the end of a fiscal year. 31 U.S.C. 1512 (b) provides that apportionments need not be made strictly on a monthly, quarterly, or other fixed time basis nor must they be for equal amounts in each time period. The apportioning officer may also consider the "activities, functions, projects, or objects" of the program being funded and the usual pattern of spending for such programs in deciding how to apportion the funds. Normally, budgetary resources will be apportioned for calendar quarters (Category A apportionments). However, periodically OMB has apportioned on an "other than quarterly basis" for activities, projects, objects; or for a combination thereof (Category B apportionments). The apportionment requirement is designed to prevent an agency from spending its entire appropriation before the end of the fiscal year and then putting the Congress in a position in which it must either grant an additional appropriation or allow the entire activity to come to a halt. An agency usually does not have the full amount of its appropriation available to it at the beginning of the fiscal year. However, since FY 1995, OMB has apportioned all of EPA's funds in the first quarter. This has been transmitted using a revised letter format which apportions all Agency funding. Beginning in FY 2002, both the standard apportionment form (SF-132) and a one-page apportionment letter format is transmitted to OMB electronically. Once an OMB approved SF-132 is on hand with the Agency, the funds can be used. Apportionment authority is normally based upon annual obligations anticipated to be incurred. However, when it is determined that obligations and outlays for certain appropriations can best be controlled at some other point before firm obligations are incurred, OMB may agree to apportion on a basis other than obligations. At EPA, commitments are the basis for apportionment allocation since that is the process for controlling funds prior to obligations that the Agency has adopted and described to OMB as part of its funds control system. When quarterly restrictions have applied, they have been "front-loaded" (apportioned very heavily in the first and second quarters of the fiscal year) to allow for the early commitment of resources that require a lot of lead time and will be obligated later in the year. With regard to carryover funding, for which funds are available beyond the current fiscal year, new apportionment action is required for the new fiscal year unless OMB determines otherwise. For balances of prior year budget authority, initial estimated apportionment schedules for the year are due to OMB by August 21 each year, as required by law. 17 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 For more detailed information on Apportionments: See OMB Circular A-11 (Part 4) and/or Chapter 6 of the Principles of Federal Appropriation Law for more detailed information on Apportionments. F.1. EPA ALLOTMENTS: (October) OMB apportions all appropriated funds to the EPA, the Office of Budget (OB) Director who serves as the Agency's apportionment holder and single allotment holder. The Agency does not have sub-allotments. The OB Director retains the original OMB signed apportionment documents on behalf of the Agency. The "allotment" is the only formal administrative subdivision of funds under 31 U.S.C. 1514 and 31 U.S.C. 1517 and is the OB Director's authority to issue "Advices of Allowance " (AOA) to EPA "Allowance Holders" (AHs). For more information on AOA, see Chapter 3, part II. F.2. ADVICE of ALLOWANCES: (November) Advices of Allowances (AOAs) are management tools for providing funds to Headquarters Program Offices and Regions for meeting Agency operational needs. They are not formal sub-allotments of apportionments or administrative divisions of funds for the purposes of 31 U.S.C. 1514 or 1517. Rather, AOAs are guidelines in the nature of an operating budget for Program Offices and Regions to use in controlling expenditure pattern. AOAs are made available to the respective Allowance Holders (AHs) through the Integrated Financial Management System (IFMS) at the start of the new fiscal year. IFMS has administrative controls to ensure that Allowance Holders do not commit or obligate funds in amounts that exceed the AOA. AOAs are only issued after Congress has passed an appropriations bill, the President has enacted it, and an Operating Plan (Op Plan) has been entered into IFMS in support of the Operating Plan. The final step shown in FIGURE-1: Budget Execution (October-September) will be covered at length in Chapters. In situations where the new fiscal year has begun and the Agency's operating plan has been submitted to the appropriation sub-committees staff but (subcommittee has modified), OB will generally load the Operating Plan into IFMS and issue the AOA in anticipation of general approval. Controversial budget items may be withheld from issuance by the OB in anticipation of pending coordination with the appropriation sub-committees. 18 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 II. FEDERAL LAWS AND GUIDANCE The following list of guidance documents and legislative acts provide the primary foundation upon which government-wide budgeting and accounting is based. A. PRINCIPLES OF FEDERAL APPROPRIATIONS LAW This extensive GAO document describes the three concepts of fund availability which are: Purpose, Time, and Amount. All three concepts must be observed for the obligation or expenditure to be legal. This three- part principle ensures that no money shall be drawn from the Treasury Department but in consequence of appropriations made bylaw. Whether appropriated funds are legally available for something depends upon the following three tests: • The purpose of the obligation or expenditure must be authorized; • The obligation must occur within the time limits applicable to the appropriation; and • The obligation and expenditure must be within the amounts Congress has established. 1. Appropriations as to Purpose: 31 U.S.C. 1301 (a) provides that public funds may be authorized only for the purpose or purposes for which they were appropriated by the Congress unless the expenditure is otherwise provided by law. The first step in interpreting a statute is to examine the plain meaning of the words in the law itself. If Congress has directly spoken to the precise question, then its unambiguously expressed intent must be given effect. Other indicators of Congressional intent, such as legislative history, are examined only if the plain meaning of the statute is unclear, Committee reports or portions of Committee reports may be expressly incorporated into the appropriations act itself and may have the force of law. Lump sum appropriations may contain little detail on Congressional intent. Legislative history includes conference committee reports, Appropriation Committee Reports and floor debates. Conference Committee Reports have the greatest weight since they reflect the views of representatives of both houses of Congress and are usually voted on and adopted by both houses when appropriations legislation is passed. Appropriations committee reports are next in order of importance, followed by floor debates. Congressional Budget Justifications are not legally binding on the agency but are considered to be part of the legislative history. Failure of the Agency to adhere to Congressional intent can have adverse practical consequences for the Agency's relationship with the committees. The Agency, as a matter of policy, generally will act in accordance with the views expressed in Conference Reports, ACRs, and other documents that reflect legislative history. Where neither the statute nor the legislative history clearly and unambiguously express Congressional intent on an issue, courts will give deference to the Agency's interpretation of a statute so long as that interpretation is a permissible and reasonable construction of the statute. As further provided in 31 U.S.C. 1301 (a), Agency appropriations contained in the annual Appropriations Act must be expended only for the purpose for which an appropriation is made, unless the expenditure for a different purpose is otherwise authorized by law. A purpose violation is not necessarily an ADA violation. The ADA is violated if a purpose violation cannot be corrected because sufficient unobligated funds do not exist during the relevant Fiscal Year (FY) in the correct appropriation account. Further, both the Comptroller General (Comp Gen) and the Office of Legal Counsel, Department of Justice 19 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 (DOJ) have opined that an expenditure or obligation of appropriated funds fora purpose precluded by an express prohibition in an appropriation act itself violates the ADA, because no funds are available for that purpose. Moreover, violations of appropriations laws are serious matters which can undermine the Agency's working relationship with the Congress. Responsible EPA employees may be subject to administrative discipline as the penalty for violating 31 U.S.C. 1301. An officer or employee of the U.S government knowingly and willfully violating the Anti-Deficiency Act shall face a criminal penalty of being "fined not more than $5,000, imprisoned for not more than 2 years, or both". TheOLC, U.S. DOJ has opined that 31 U.S.C. ' 3528(b), which purports to authorize the Comp Gen to relieve certifying officers from liability, and 31 U.S.C. ' 3529, which purports to authorize the Comp Gen to issue advance opinions on the legality of payments, are not consistent with our Constitution's separation of legislative and executive powers. Memorandum for Janis A. Sposato, GC, Justice Management Division, from John O. McGinnis, Deputy Assistant Attorney General, OLC (August 5, 1991) (McGinnis Memo). OLC is responsible for providing legal advice to the President and the heads of Executive departments and agencies. Its decisions are binding on Executive Agencies unless a court rules otherwise. Nonetheless, OLC has also determined that Comp Gen decisions are "useful sources" in resolving appropriation law issues and EPA may follow Comp Gen opinions unless the Office of General Counsel (OGC) advises otherwise. See Memorandum for Emily C. Hewitt, General Counsel, General Services Administration (GSA) from Richard L. Shiffrin, Deputy Assistant Attorney General, OLC (August 11, 1997)] While certain funding levels and limitations may be included in authorizing legislation, appropriation legislation will generally control the disposition of an issue where the appropriations act itself clearly demonstrates Congressional intention to depart from funding levels or limitations in the authorizing legislation. Nonetheless, the authorizing act and appropriations act should be harmonized to the greatest extent possible. The authorizing legislation and the appropriation go hand in hand to establish a mandate for environmental action followed by the funds to carry out the mandate. Since it is not possible to specify every item for which appropriations will be expended within the appropriations act, particularly if it is a lump sum appropriation, the spending agency has reasonable discretion in determining how to carry out the objectives of the appropriation. Some of the specific program results code (PRC) activities for which the Agency has justified funding are found under the goals and objectives portions of the CBJ. These funding declarations become a part of the legislative history to the annual Appropriations Act. Additionally, other costs that are undeclared but necessary in implementing Agency programs are incurred based on the "Necessary Expense Rule". For an expenditure to be justified as a necessary expense, three tests must be met: • The expenditure must bear a logical relationship to the appropriation sought to be charged. In other words, it must make a direct contribution to carrying out either a specific appropriation or an authorized agency function for which more general appropriations are available. • The expenditure must not be prohibited by law. • The expenditure must not be otherwise provided for, that is, it must not be an item that falls within the scope of some other appropriation or statutory funding scheme. 20 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Additionally, for an expenditure to be justified as meeting the purpose of a particular appropriation, it is important to know whether or not the action is funding something from one appropriation that traditionally may have been funded from a different appropriation. In 59 Comp. Gen 518 (1980), GAO opined that: "Where either of two appropriations may reasonably be construed as available for expenditures not specifically mentioned under either appropriation, the determination of the agency as to which of the two appropriations to use will not be questioned. However, once the election has been made, the continued use of the appropriation selected to the exclusion of any other for the same purpose is required. @ This case involved separate EPA lump-sum appropriations for "Research and Development (R&D)" and "Abatement and Control (A&C)." The contract in question, entered into in 1975, could arguably have been charged to either appropriation, but EPA had elected to charge itto R&D. Applying the above rule, the Comp Gen concluded that a 1979 modification to the contract had to be charged to R&D funds, and that the A&C appropriation could not be used. This case should not be read as limiting the rule to a particular contract, grant, or other transaction.] This concept has become known throughout the Federal Government as the "Pick and Stick" rule. Basically, the Agency may make an initial election as to which appropriation to use (the "Pick"), but once the decision has been made the Agency must "Stick" to its choice, and the Agency cannot, because of insufficient funds or other reasons, change its election in a subsequent FY and use another appropriation unless Congress is first informed of the Agency's planned change. 2. Appropriations as to Time: The placing of time limits on the availability of appropriations is one of the primary means of congressional control. By imposing a time limit, Congress reserves the prerogative of periodically reviewing a given program or agency's activities. The life cycle of appropriations. The life-cycle of appropriations with fixed periods of availability consists of three (3) sequential phases: the Unexpired Phase, the Expired Phase, and the Cancelled Phase. When an appropriation is made available for a fixed period of time, the general rule is that the availability relates to the authority to obligate the appropriation. It does not necessarily prohibit payments after the expiration date for obligations previously incurred, unless the payment is otherwise expressly prohibited by statute. The availability of balances of appropriations to incur, adjust, or pay obligations differs in each phase. Statutory and regulatory changes (Federal Acquisition Streamlining Act (FASA) of 1994 section 1073, and Federal Acquisition Regulation (FAR) 37.106), now permit agencies to enter into a contract, exercise an option or issue a delivery order and obligate annual ("one year") appropriations to acquire severable services that begin in one fiscal year and end in the next fiscal year. The contract, option period or delivery order cannot exceed 12 months. The EPA Office of General Counsel (OGC) has opined that these provisions also apply to acquisitions funded with multi-year appropriations (such as "two-year" appropriations provided to EPA). What this means, for example, is that EPA may obligate FY2004/2005 funding to fund twelve months severable services that begin in FY 2005 and end in FY2006. [Severable services are those which are continuing and recurring in nature (such as window washing services), while non-severable services are those that are characterized as a single undertaking (conducting a study and preparing a final report thereon). Non-severable services may be charged to the appropriation current at the time the contract was made, even though performance carries over into a subsequent fiscal year.] 21 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 a. The Unexpired Phase. During this phase, the appropriation may be used to incur new obligations and to liquidate (pay) properly incurred existing obligations. Balances in this phase are unexpired and uncancelled. b. The Expired Phase. The expired phase begins when the authority to incur new obligations against appropriations expires. For annual appropriations this occurs at the end of the fiscal year for which the funds are appropriated. For multi-year appropriations this occurs at the end of the last fiscal year for which the funds are appropriated. During the expired phase, no new obligations can be incurred against the appropriation. Expired balances of an appropriation are available for the following: Expired obligated balances are available to liquidate obligations properly incurred during the period when the appropriation was unexpired. Expired unobligated balances are available only to satisfy an unrecorded or under recorded obligation properly chargeable to the appropriation of that particular year, and cannot be used to satisfy an obligation properly chargeable to current appropriations, or to any other year of the five- year period. Unless otherwise specified by law, the Expired Phase lasts for five (5) years after the period for which the appropriation was available for new obligations. All audit requirements, limitations on obligations, and reporting requirements applicable to an appropriation in the Unexpired Phase continue to apply in the Expired Phase. EPA requested and received statutory authority for the Expired Phase to last for seven (7) years after the period for which the appropriation was available for new obligations (P.L. 105-276 and P.L. 106-377). This statutory authority was granted to start with two-year appropriations beginning in FY 1999 (i.e., FY1999/2000 funding). Two-year appropriations enacted prior to FY 1999 continue to have an Expired Phase for 5 years. c. The Cancelled Phase. At the end of the expired phase, all obligated and unobligated balances must be cancelled, and the account is closed. Cancelled balances may not be used to incur or pay obligations. Collections authorized or required to be credited to a cancelled appropriation that are received after the account is closed must be deposited in the Treasury as miscellaneous receipts. (For more information regarding the Expired and Cancelled Phase, see section G, "M" Account legislation in this Chapter). One of the fundamental principles of appropriations law is the "bonafide needs rule" which says that a fiscal year appropriation may be obligated only to meet a legitimate, or bona fide, need arising in, or in some cases arising prior to but continuing to exist in, the time period for which the appropriation was made. A good example of the bonafide rule is when ordering supplies at the end of a FY. An order or contract for the replacement of stock is viewed as meeting a bona fide need of the year in which the contract is made as long as it is intended to replace stock used in that year, even though the replacement items will not be used unit the following year. Stock in this context refers to 'readily available common-use standard items. There are limits, however, GAO has questioned the validity from the bona fide needs perspective, of the purchase of materials carried in stock for more than a year prior to the issuance for use (See GAO Decision B-134277, Dec 18, 1957). EPA appropriations are of three term types: annual, multi-year, and no-year (these three types are covered in more detail in Part III.B of this Chapter). 22 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 a. One-Year appropriations are available only to meet a bona fide need of the fiscal year for which they were appropriated. As of FY 2004, EPA has no one-year appropriations.] b. Multi-year appropriations are subject to the same bona fide need rule applicable to annual appropriations, apart from the extended period of availability, c. No-year appropriations are available for obligation to satisfy a need arising during the year of and subsequent to the no-year appropriation. No-year funds may be obligated for needs arising in: (a) the year the no-year funds were appropriated; (b) years subsequent to the year of the no-year appropriation. Prior year(s) obligations cannot be paid with future year no-year appropriations for such a payment would violate the ADA prohibition against obligations or expenditures in advance of an appropriation unless authorized by law. Based on advice from OLC, EPA's OGC has advised that the "bona fide needs rule" does not apply to payments made to financial assistance recipients from funds obligated in a previous fiscal year. The bona fide need for a grant or cooperative agreement arises in the fiscal year in which funding is obligated to meet the authorized public purpose of the grant or cooperative agreement.] 3. Appropriations as to Amount: The third major element of the concept of the "legal availability" of appropriations is restrictions relating to amount. It is not enough to know what you can spend appropriated funds for and when you can spend them. You must also know how much you have available for a particular activity. The Antidefiency Act (ADA) is one of the major laws in the statutory pattern by which Congress exercises its constitutional control of the public purse. It has been termed the cornerstone of Congressional efforts to bind the Executive branch of government to the limits on expenditure of appropriated funds. Briefly, in its current form, the Antideficiency Act (ADA) prohibits: • obligation or expenditure in excess of appropriations; • obligation or expenditure in advance of appropriations unless authorized by law; • accepting voluntary services for the United States exceeding that authorized by law; and • obligation or expenditure in excess of apportionments or administrative divisions of apportionments. The Antideficiency Act (ADA) is described in greater detail in Chapter 4 (Section A) including reporting violations and both civil and criminal penalties for violation. B. BUDGET AND ACCOUNTING ACT (BAA) of 1921 and SUPPLEMENTAL APPROPRIATIONS ACT OF 1955 The Budget and Accounting Act of 1921 and Supplemental Act of 1955 provide the budget and appropriations authority of the President, budget contents and submissions to Congress, supplemental appropriations, and advances. The specific requirements for recording obligations such as documentary evidence, is provided by 31 U.S.C. 1501. 23 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 C. ECONOMY ACT (1958) It is not uncommon for federal agencies to provide goods or services to other federal agencies. The Economy Act authorizes agencies to obtain services either directly or through contracts awarded by other agencies when it promotes economy and efficiency for the government. Examples of when the another federal agency enters into an Inter-Agency agreement with EPA (a.k.a. an IAG) is when the U.S. Coast Guard contracts with EPA to assist them in oil spills, or when the Federal Emergency Management Agency (FEMA) needs the Agency's help with planning for and reacting to an emergency. lAGs also work in the opposite direction whereby EPA may give contract with another agency (e.g., EPA contracting with the Department of Health and Human Services (DHHS) for a study on health-related issues). Both agencies must have the authority for the underlying activities proposed in the agreement. An Economy Act agreement may not exceed the period of availability of the source appropriation. In addition, a one-year appropriation obligated under an Economy Act agreement must be deobligated at the end of that fiscal year if the performing agency has not performed or incurred valid obligations under the agreement. In the case of a multi-year appropriation, this rule applies at the end of the source appropriation's period of availability. The reason for this requirement is to prevent the Economy Act from being used to extend the life of an appropriation beyond that provided by Congress in an appropriations act. D. CONGRESSIONAL BUDGET IMPOUNDMENT and CONTROL ACT (1974) Under this Act, an impoundment is defined as an action or inaction by an officer or employee of the United States that precludes the obligation or expenditure of budget authority provided by Congress. There are two types of impoundment actions: deferrals and rescissions. A deferral is a postponement of budget authority in the sense that an agency temporarily withholds or delays an obligation or expenditure. Deferrals may be proposed by agencies but must be communicated to the Congress by the President in a special message. Deferred budget authority may not be withheld from obligation unless legislation is passed by Congress to approve the deferral and the legislation is enacted by the President. A rescission involves the cancellation of budget authority previously provided by law (before that authority would otherwise expire) and can be accomplished only through subsequent law. If a federal agency fails to obligate appropriated funds, the Comp Gen is authorized by 2 U.S.C. 682 to bring a civil action against that agency. The expiration of budget authority or delays in obligating it resulting from a legitimate programmatic delay or ineffective or unwise program administration are not regarded as impoundment unless accompanied by or derived from an intention to withhold funds. E. FEDERAL MANAGER'S FINANCIAL INTEGRITY ACT (FMFIA) (1982) The Federal Manager's Financial Integrity Act (FMFIA) is designed to: • protect government resources from fraud, waste, abuse or mismanagement; • require systematic self-examination of management controls by program managers; and • require agency heads to report annually to the President and Congress on the state of management control systems, identify material management control weaknesses, and provide corrective action plans and milestones. 24 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 The Act requires the establishment of systems of internal accounting and administrative controls, according to standards prescribed by the Comp Gen , which provide reasonable assurance that: • obligations and costs are in compliance with applicable law; • funds, property, and other assets are safeguarded against waste, loss, unauthorized use or misappropriation; and • agency revenues and expenditures are properly recorded and accounted forto permit the preparation of accounts and reliable financial and statistical reports, and to maintain accountability over assets. The agency's annual report must provide a separate statement of whetherthe agency's accounting system conforms to the principles, standards and related requirements prescribed by the Comp Gen under Section 112 of the Accounting and Auditing Act of 1950. OMB Circular A-123 establishes broad guidelines for agency self-evaluation of management control systems. F. CHIEF FINANCIAL OFFICERS ACT (CFO) (1990) The Chief Financial Officers (CFO Act) of 1990 requires 23 federal departments and agencies to prepare and audit financial statements for Trust Funds, Revolving Funds, and commercial activities accounts. Chief Financial Officers (CFOs) are designated by each federal department or agency and have the fundamental responsibility to assure that its use of public funds adheres to the terms of the pertinent authorization and appropriations acts, as well as any other relevant statutory provisions. The Office of Chief Financial Officer (OCFO) is the CFO for the Agency. G. "M" ACCOUNT LEGISLATION The National Defense Authorization Act (NDAA) of 1990 amended controls on the availability of appropriation accounts and the procedures for closing appropriation accounts. (31 U.S.C. 1551-57). The Act cancelled all merged ("M" account) surplus authority (unobligated balances in expired appropriations) as of December 5, 1990. The Act also requires that, from 1990 on, unobligated balances & unliquidated obligations will be cancelled for five (5) years after an appropriation has expired, and then that account will be closed out. EPA has an exception to this time period. EPA requested and received special statutory authority for this phase to last for seven years after the period for which the appropriation was made available for new obligations (P.L. 105-275 and P.L. 106-377). This special authority started with two-year appropriations beginning in FY 1999 (i.e. FY 1999/2000 funding). Two-year appropriations enacted prior to FY 1999 continue to be cancelled 5 years after its expiration.] After an appropriation account has been cancelled (i.e., closed) out, bills received against cancelled obligations must be paid from current appropriations available for the same purpose. The total amount of charges to a current appropriation account may not exceed 1 % of the total appropriations for that account. OMB Bulletin 91-07, which implements this legislation, requires Federal agencies to have available up to 1% of their current year appropriations to liquidate any liabilities that arise from accounts that have been cancelled. Should a payment be needed that exceeds the 1 % funding availability, the Agency must go back to Congress, and request a supplemental appropriation. 25 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 H. GOVERNMENT PERFORMANCE AND RESULTS ACT (GPRA) (1993) An outgrowth of the CFO Act, GPRA requires the head of each agency to submit to the Director of The Office of Management and Budget (OMB) and to Congress a strategic plan for its program activities. The plan shall contain: • a comprehensive mission statement covering the major functions and operations of the agency; • general goals and objectives, including outcome-related goals and objectives, forthe major functions and operations of the agency; • a description of how the goals and objectives are to be achieved, including a description of the operational processes, skills and technology, and the human, capital, information, and other resources required to meet those goals and objectives; • an a description of how the performance goals included in the plan required by 31 U.S.C. 1115(a) of Title 31 shall be related to the general goals and objectives in the strategic plan; • identification of those key factors external to the agency and beyond its control that could significantly affect the achievement of the general goals and objectives; and • a description of the program evaluations used in establishing or revising general goals and objectives, with a schedule for future program evaluations. GPRA requires EPA to report each year on progress towards achieving annual, strategic goals. Annual Performance Reports, which assess Agency accomplishments against annual performance goals and measures, are due to Congress six months after the end of each fiscal year. EPA submitted its first Annual Performance Report to Congress on March 30, 2000, using performance data submitted by states, tribes, regions, and national programs. EPA now submits its annual performance report with the annual financial statement which is called the Performance Assessment Report (PAR). EPA managers will be able to consider these performance results together with cost/benefit and risk assessment/risk management information, and financial data, to help them evaluate and adjust strategies, program directions, and resource allocations to achieve EPA's strategic goals. I. OMB CIRCULAR A-11 (PART 2)1 PREPARATION & SUBMISSION OF BUDGET ESTIMATES Government-wide requirements and guidance on the preparation and submission of Federal Budgets are contained in OMB Circular A-11. Contents include: policies, instructions for building the budget data base and preparing the budget documents, requirements to provide supporting data forthe budget, and forthe transmittal of the budget. In relation to budget formulation, A-11 requires agencies report costs in terms of Object Classification, defined in Part II of the Circular. Object Classification is used to report obligations for each account according to the nature of the goods and services procured. Obligations are categorized by their purpose and are designated to one of the following groupings: Personnel Compensation and Benefits (PC&B); Contractual Services and Supplies; Acquisition of Capital Assets; Grants and Fixed Charges; and Other. These classifications tie into RMDS 2590 Part IV which includes all of EPA's sub-object class codes and definitions. This will be discussed in more detail in Chapter 3. 26 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 J. OMB CIRCULAR A-11 (PART4)/ INSTRUCTIONS ON BUDGET EXECUTION Government-wide requirements and guidance regarding budget execution are contained in OMB Circular A- 11 (Part 4). Contents include guidance on: requirements and instructions, concepts, agency accounting and fund control systems, reports on budget execution, apportionments, rescissions and deferrals, etc. 27 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 III. EPA LEGISLATION A. AUTHORIZING LEGISLATION EPA's management and administrative functions are provided for by "enabling legislation". Our environmental programs are legislated by Acts of Congress in the form of authorizing (or program') legislation. Authorizing legislation provides zero funding in and of itself: it is not an appropriation of funds. For EPA, authorizing legislation establishes the Agency's environmental mission that may be undertaken with funds provided by subsequent appropriations legislation. 1. Clean Air Act (CAA) The Clean Air Act (CAA) is intended to foster the protection and enhancement of the nation's air quality, and to safeguard public health and welfare and the productive capacity of the population. The Act is divided into six titles: • Title I includes provisions for setting and achieving ambient air quality standards, and requirements to control pollution from certain stationary sources; • Title II deals with control of pollution from mobile sources; • Title III addresses general and administrative matters; • Title IV deals with requirements to control pollution that leads to acid deposition; • Title V includes requirements for the issuance of operating permits for certain stationary sources; and • Title VI deals with pollution that contributes to depletion of the stratospheric ozone layer. The Act requires EPA to promulgate National Ambient Air Quality Standards (NAAQS) for certain pollutants to protect the public health and welfare. 2. Federal Water Pollution Control Act (FWPCA) of 1948 Clean Water Act (CWA) 1972 Water Quality Act (WQA) of 1987 Beaches Environmental Assessment & Coastal Health Act of 2000 The Federal Water Pollution Control Act (FWPCA), 33 U.S.C.A. 7251 etseq., originally enacted in 1948, was amended in 1956 and 1966 to authorize a program of grants to municipalities for construction of sewage treatment plants and institute a program of mandatory water quality standards for interstate waters. The Act was substantially revised in 1972 by amendments referred to as the Clean Water Act (CWA). The stated objective of the CWA is to restore and maintain the "chemical, physical, and biological integrity of the Nation's waters", and the goal is to achieve "fishable and swimmable" waters by 1983 and total elimination of pollutant discharges into navigable waters. The CWA spells out requirements for water quality standards and an implementation system of permits for technology-based effluent limitations that apply to industrial and municipal discharges. Congress made certain fine-tuning 28 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 amendments of the CWA in 1977 and reauthorized and revised the construction grants program in 1981. The Water Quality Act of 1987 (WQA) brought major revisions to the CWA. It authorized new water quality programs, reauthorized existing programs, and called for EPA to supplement technology-based controls with water quality-based pollution controls. The WQA increased requirements pertaining to toxics, sludge, and non-point sources of pollution and authorized funds for Nonpoint Source grants, the National Estuary Program, and the Great Lakes and Chesapeake Bay programs. The WQA also reauthorized the construction grants program through 1990 and provided for its phase-out and replacement with a State Revolving Fund (SRF) program, to be capitalized bygrantstothe States. The Beaches Environmental Assessment & Coastal Health (BEACH) Act of 2000 amends the CWA to improve the quality of coastal recreation waters. This Act authorizes a national program grant to assist state, tribal, and local governments in developing and implementing monitoring and public notification programs for their coastal recreation waters. It also requires states to adopt improved water quality standards for pathogens and pathogen indicators and requires EPA to conduct studies and develop improved microbiological water quality criteria guidance. 3. Marine Protection. Research, and Sanctuaries Act of 1972 (MPRSA) Unless authorized by a permit, the Marine Protection, Research, and Sanctuaries Act (MPRSA) generally prohibits (1) the transportation of material from the United States for the purpose of ocean dumping; (2) the transportation of material from any location for the purpose of ocean dumping by U.S. agencies or U.S.-flagged vessels; and (3) the dumping of material transported from outside the United States into the U.S. territorial sea ( MPRSA ' 101). Permits under the MPRSA may not be issued for the dumping of sewage sludge or industrial waste (MPRSA ' 104B(a)); or radiological, chemical, and biological warfare agents; high-level radioactive waste; or medical waste (MPRSA ' 102(a)). The dumping at sea of low-level radioactive waste requires a joint resolution of Congress. (MPRSA ' 104(i)). Permits may be issued for other materials if the dumping will not unreasonably degrade or endanger human health, welfare, or the marine environment (MPRSA ' 102 (a) and 103(a)). EPA is charged with developing criteria to be used in evaluating applications for ocean dumping permits (MPRSA ' 102(a)). EPA also is responsible for designating recommended sites for ocean dumping (MPRSA ' 102(c)). EPA is the permitting authority for all materials except dredged material (MPRSA ' 102(a)). The U.S .Army Corps of Engineers is the permitting authority for dredged material, subject to EPA concurrence and the use of the ocean dumping criteria developed by EPA (MPRSA ' 103). 4. Safe Drinking Water Act (SDWA) 1974 The Safe Drinking Water Act (SDWA) as amended in 1986 and 1996 is the basis for protecting drinking water systems that serve the public. The Act directs the Administrator of EPA to establish primary (enforceable) and secondary (advisory) National Drinking Water regulations based on maximum contaminant levels of specific pollutants, provides for state enforcement of the requirements, establishes a program for protection of underground sources of drinking water, and provides for a State Revolving Fund to aid systems in carrying out the Act. 5. Solid Waste Disposal Act (SWDA) Resource Conservation and Recovery Act (RCRA) 1976 Hazardous and Solid Waste Amendments (HSWA) of 1984 29 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 The Solid Waste Disposal Act (as amended by the Resource Conservation and Recovery Act (RCRA) and the Hazardous and Solid Waste Amendments of 1984), is commonly known as "RCRA." The statute is intended to address the health and environmental dangers arising from the generation, management and disposal of solid and hazardous wastes. Subtitle C of RCRA provides for comprehensive "cradle-to-grave" regulation of hazardous wastes: owners or operators of hazardous waste treatment, storage or disposal facilities must obtain a permit to operate, and must meet standards appropriate to the type of unit managing the waste; hazardous wastes must be treated prior to land disposal; and off-site movements of hazardous wastes must be accompanied by a document known as a "manifest." The requirement for a manifest applies from the waste's point of generation to its point of final treatment or disposal, and helps ensure that wastes are not discarded indiscriminately in the environment by listing precise origin, volume, and amounts of each waste. Although much of RCRA is focused on the current and future management of hazardous wastes, the statute also includes a significant cleanup program: e.g., owner/operators seeking an operating permit are required to clean up past releases of hazardous wastes and constituents at their facility in order to obtain a permit. In addition, RCRA Subtitle D establishes a largely State-administered program for the management of solid, non-hazardous wastes. 6. Comprehensive Environmental Response. Compensation and Liability Act (CERCLA) of 1980 Superfund Amendments and Reauthorization Act (SARA) of 1986 Emergency Planning and Community Right-to-Know Act (EPCRA) of 1986 Small Business Liability Relief and Brownfields Revitalization Act of 2002 The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), (42 U.S.C. 9601 et sea.), enacted in 1980, was amended and reauthorized for five years by the Superfund Amendments and Reauthorization Act of 1986 (SARA). CERCLA as amended by SARA charges the Agency with the responsibility for providing emergency response for hazardous substances released into the environment and the cleanup of inactive or abandoned hazardous waste disposal sites. The Agency is authorized under SARA to respond to releases of hazardous substances, pollutants, and contaminants by either a removal or remedial action or by compelling responsible parties to undertake the response action. The reauthorized statute significantly broadened Superfund (SF) authorities in key response, enforcement, and research areas. It established cleanup standards and mandatory schedules to ensure rapid and permanent solutions in cleaning up sites. It contained new and stronger enforcement provisions to encourage expeditious settlements with responsible parties, and to implement a more formal cleanup process for Federal facilities. It significantly increased SF health related and research and development authorities, including provisions for an alternative treatment demonstration program and health effects research. Overall, the statute expands State and public participation at all stages of the cleanup process. A subpart of SARA Title III, the national "Emergency Planning and Community Right-to-Know" Act (EPCRA) was signed into law October 17,1986 as the key legislation of community safety. Congress enacted this law to help local communities protect public health, safety, and the environment from chemical hazards. Two of the main goals of EPCRA are to "provide a basis for each community to develop a chemical emergency preparedness and planning program that suits its individual needs," and "provide the public with the identity, quantity, location, and properties of hazardous substances in the community, as well as data on annual release of certain chemicals into the environment." SARA also amends Subtitle I of the Hazardous and Solid Waste Amendments (HSWA) and authorizes the establishment of a Leaking Underground Storage Tank (LUST) Trust Fund to clean up releases 30 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 from leaking underground petroleum storage tanks. The LUST Trust Fund is financed by taxes on motor fuels. Owners and/or operators are initially responsible for cleanup of their leaking tanks. At abandoned sites or at sites where owners/operators do not meet their cleanup responsibilities, the Trust Fund (TF) provides the resources for EPA or States to undertake or enforce necessary corrective action and to recover costs expended from the fund. EPA's objective is to implement this program primarily through cooperative agreements with States. To this end, the Agency will only undertake corrective action when an owner/operator or a State fails to respond to a substantial threat to human health and the environment. The Small Business Liability Relief and Brownfields Revitalization Act (SBLRBRA) was signed into law on January 11, 2002. It amends CERCLA to encourage cleanup and reuse of brownfields and other contaminated properties. The law establishes a statutory Brownfields program, clarifies Superfund liability for certain parties as well as the State and Federal roles in hazardous waste cleanup. The Brownfields program includes grants for assessment, cleanup, capitalizing cleanup revolving loan funds, State and Tribal response programs, and training, research, and technical assistance. 7. Energy Policy Act of 2005 The Energy Policy Act of 2005 was signed into law on August 8, 2005 as part of the Federal government's efforts to stimulate development and use of more efficient and environmentally friendly domestic energy sources. As part of this new law, the Environmental Protection Agency was authorized under Title VII to reduce vehicle emissions by enhancing the development of clean school bus fleets. EPA was required to develop fuel regulations, revise emission models, undertake fuel related studies and analyses, and expand its retrofit program for diesel powered school buses. EPA was also authorized under Title XV, Subtitle Bto make major changes to its Leaking Underground Storage Tanks Program to further reduce underground storage tank releases to the environment. It also authorized EPA to develop new inspection requirements and provide grants with LUST trust fund money to the states to expand their inspections of leaking underground storage tanks. EPA was authorized under this new Act to provide grants for compliance assistance to owners and operator of underground storage tanks and enforce fuel standards. 8. Federal Insecticide. Fungicide and Rodenticide Act (FIFRA) 1972 The Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) of 1972 requires that all pesticides, with minor exceptions, must be registered with EPA before they can be sold or distributed in commerce. Pesticide products can be registered only if they can be shown not to cause unreasonable adverse effects on humans orthe environment. As part of the registration process, scientific data and proposed label instructions for use and cautionary statements are submitted by registrants and reviewed by EPA to ensure that when registered products are used in accordance with label instructions they will be safe. FIFRA also provides that EPA can designate the more dangerous pesticide products for restricted use by certified applicators only. 9. Food Quality Protection Act (FQPA) of 1996 The Food Quality Protection Act (FQPA) amends two pesticide-related statutes: the Federal Insecticide, Fungicide, and Rodenticide Act and the Federal Food, Drug, and Cosmetic Act. The new law corrects the so-called "Delaney clause", replacing it with a protective and more consistent regulatory system that applies a uniform health-based standard for pesticide residue tolerances in raw and processed food. EPA can approve a tolerance only if it is considered safe, and the law defines safe as "a reasonable certainty of no harm." The Act also makes children's health a primary concern in assessing pesticide tolerances. If a pesticide residue will be unsafe for children, it will not be permitted on food. New 31 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 pesticide/use applications that meet the reduced risk criteria will be expedited. Another provision of the Act directs that consumers will have a right to know about pesticide residues found in the food they buy at the grocery store. The law also mandates a revamping and modernization of the pesticide review system in light of the new safety standard. The statute also requires EPA to reevaluate all existing pesticide tolerances within 10 years. The reviews will give the public greater assurance that only pesticides that meet strict and current safety standards can remain on the market. 10. Toxic Substances Control Act (TSCA) of 1976 The Toxic Substances Control Act (TSCA) of 1976 was enacted by Congress to test, regulate and screen all chemicals produced in or imported into the U.S. Many thousands of chemicals and chemical compounds are developed each year with unknown toxic characteristics. To prevent tragic consequences should they come in contact with the general public, TSCA requires that any chemical which reaches the consumer marketplace be tested for possible toxic effects prior to first commercial manufacture. Any existing chemical which is determined to pose unreasonable health and environmental hazards is also regulated under TSCA (example: polychlorinated biphenyls (PCBs) are controlled under TSCA). Procedures are also authorized for corrective action under TSCA in cases of cleanup of toxic materials contamination. 11. Radon Abatement Act of 1988 In October 1988 Congress amended TSCA by adding Title Ill-Indoor Radon Abatement (15 U.S.C. 2661 etseq., P.L. 100-551). The basic purpose of Title III is to provide financial and technical assistance to the States that choose to support radon monitoring and control; neither monitoring nor abatement of radon is required by the Act. 12. The National Environmental Policy Act (NEPA) (1969) The National Environmental Policy Act (NEPA) establishes a broad national framework for assessing the environmental impacts of major federal actions that significantly affect the quality of the human environment. NEPA has two major objectives: To prevent damage to the environment and to ensure that federal agency decision makers give appropriate consideration and weight to environmental factors before taking any major federal action that significantly affects the quality of the human environment. NEPA also established the Council of Environmental Quality (CEQ) to advise the President on environmental matters. CEQ promulgated regulations implementing section 102(2) of NEPA. Under NEPA and the CEQ regulations, unless an action is categorically excluded, agencies conduct an environmental review in the form of an Environmental Assessment or Environmental Impact Statement (EIS), as appropriate. These documents, analyze the environmental impacts of and alternatives to the proposed action. Most of EPA's actions are not subject to NEPA because either they are statutorily exempt from NEPA or functionally equivalent to NEPA. EPA actions that are subject to NEPA include issuance of National Pollutant Discharge Elimination System (NPDES) permits for new sources under the CWA, award of grants for certain projects funded through EPA's annual Appropriations Acts, research and development activities, and facilities construction. EPA has adopted a voluntary NEPA policy under which EPA may prepare NEPA documents voluntarily when it is not legally required to do so if such documents would be beneficial in addressing agency actions. In addition, in conjunction with other statutes, NEPA generally provides authority for EPA to conduct international environmental activities. 32 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 13. Pollution Prevention Act (PPA) of 1990 The Pollution Prevention Act (PPA) of 1990 requires the EPA to establish an Office of Pollution Prevention to develop and coordinate a pollution prevention strategy, and develop source reduction models. In addition to authorizing data collection on pollution prevention, the Act requires owners and operators of facilities required to file an annual toxic release form under section 313 of EPCRAto report annually on source reduction and recycling activities. Enactment of the Pollution Prevention Act (PPA) of 1990 marked a majorturning point in the direction of U.S. environmental protection policy. From an earlier focus on the need to reduce or repair environmental damage by controlling pollutants at the point where they are released to the environment- -i.e., at the "end of the pipe" or smokestack, at the boundary of a polluter's private property, in transit over public highways and waterways, or after disposal-Congress turned to pollution prevention through reduced generation of pollutants at their point of origin. Broad support forthis policy change was based on the notion that traditional approaches to pollution control had achieved progress but should in the future be supplemented with new approaches that might better address methods of controlling pollution from dispersed or non-point sources of pollution. Pollution prevention, in the form of "source reduction," is viewed as the first step in a hierarchy of options to reduce risks to human health and the environment. Where source reduction is not possible or may not be cost effective, other options would include recycling, followed next by waste treatment according to environmental standards, and as a last resort, safe disposal of waste residues. 14. Oil Pollution Act of 1990 The Oil Pollution Act (OPA) legislation significantly increases the spiller's liability for oil spill cleanup costs and damages, imposing stiffer civil and criminal penalties. Spillers are required to pay oil spill cleanup costs and to compensate parties economically injured by them. Additional money for cleanup and compensation is to be available through the Oil Spill Liability Trust Fund (OSLTF) managed by the U.S. Coast Guard. This fund is supported by an oil tax, but subject to annual appropriations. The fund is to be used by the federal government for removal costs, monitoring, administrative, operational and personnel costs for implementation and enforcement of the Act. The Act also requires double hulls on most oil tankers and barges, and requires better contingency planning on the part of potential spillers and federal, state, and local governments. The Act continues to allow states to impose unlimited liability on shippers and contains various provisions to increase navigation safety. The Act also expands research on environmental impacts and cleanup methods of spills and expands the President's power to direct oil spill cleanups. 15. Inspector General Act of 1978 The Inspector General Act requires the Inspector General (IG) to conduct and supervise independent and objective audits and other reviews relating to agency programs and operations (including contracts, grants, and acquisition management, financial transactions, funds control, and financial statements). The IG also makes recommendations to promote economy, efficiency, and effectiveness; prevents and detects fraud, waste, and abuse; and keeps agency heads and the Congress fully and currently informed of problems. The EPA OIG conducts and promotes program evaluations of EPA programs and activities (including process, outcome, impact, and cost-benefit). The OIG Office of Investigations is a law enforcement entity that conducts criminal, civil, and administrative investigations of alleged misconduct by Agency, contractor, or grantee employees. To ensure objectivity, the IG Act provides the IG's with independent authority to carry out activities such as determining what reviews to perform and 33 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 obtaining all necessary information, developing and executing budgets through independent appropriations, selecting and appointing OIG employees (including Senior Executive Service (SES) positions), and entering into contracts. This independence protects the OIG from interference by Agency management and allows it to function as the Agency's fiscal and operational watchdog. In the budget formulation process through execution, Agency management may not reduce or reallocate OIG resources if the OIG conforms to OMB and Congressional guidance. B. APPROPRIATIONS ACT and ACCOUNTS Annual appropriation acts provide the funding for authorized programs. While certain funding levels and limitations may be included in authorizing legislation, appropriation legislation will generally control the disposition of an issue where the appropriations act itself clearly demonstrates Congressional intention to depart from funding levels or limitations in the authorizing legislation. Nevertheless, the authorizing act and appropriations act should be harmonized to the greatest extent possible. The authorizing legislation and the appropriation go hand in hand to establish a mandate for environmental action followed by the funds to carry out the mandate. Congress provides appropriations to EPA for three basic periods of availability. These are (1) annual, (2) multi-year, and (3) no-year. Within the context of appropriations as to Time, Purpose, and Amount (referred to in Part II A of this Chapter), these periods define the time of availability, and to a somewhat lesser degree, the purpose. A review of eight major EPA appropriations as they fall within these periods of availability follows: 1. One-Year Appropriations are provided for a specific fiscal year and are available for obligation only during that fiscal year. The federal government's fiscal year begins on October 1 and ends on September 30 in the following year. One-Year appropriations are available only to meet a bona fide need of the fiscal year for which they were appropriated. The "bona fide needs rule" provides that a fiscal year appropriation may be obligated only to meet a legitimate, or bona fide, need arising in, or in limited cases arising prior to but continuing to exist in, the time period for which the appropriation was made. If an agency fails to obligate its annual funds by the end of the fiscal year for which they were appropriated, they cease to be available for obligation and are said to have "expired" for obligational purposes. Since FY2004, EPA has had no one-year appropriations. 2. Multi-Year Appropriations are available for obligation fora definite period in excess of one fiscal year. Apart from the extended period of availability, multi-year appropriations are subject to the same principles that apply to annual appropriations. Because of the extended period of availability, multi-year appropriations may have unobligated balances which "carry over" from one year to the next and are available for obligation following the annual reapportionment by OMB. EPA's multi-year appropriations are two-year appropriations which are appropriated annually but are available for obligation for two years. EPA's two-year appropriations are: a. Environmental Programs and Management (EPM) Appropriation The EPM appropriation account encompasses a broad range of abatement, prevention, and compliance activities, and personnel compensation, benefits, travel, and expenses for all programs of the Agency except Science and Technology (S&T), Hazardous Substance Superfund (HSSF), Leaking Underground Storage Tank (LUST) Trust Fund, Oil Spill Response (OSR), and the Office of 34 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 the Inspector General (OIG). Abatement, prevention, and compliance activities include setting environmental standards, issuing permits, monitoring emissions and ambient conditions and providing technical and legal assistance toward enforcement, compliance, and oversight. In most cases, the states are directly responsible for actual operation of the various environmental programs. In this regard, the Agency's activities include oversight and assistance in the facilitation of the environmental statutes. In addition to program costs, this account funds a large portion of the administrative costs associated with the operating programs of the Agency, including support for executive direction, policy oversight, resources management, general office and building services for program operations, and direct implementation of all Agency environmental programs except those previously mentioned for Headquarters, the ten EPA Regional offices, and all non-research field operations. b. Science and Technology (S&D Appropriation EPA's Science and Technology (S&T) appropriation account funds the scientific knowledge and tools necessary to support decisions leading to improved protection of human health and the environment, and to advance the base of understanding of environmental sciences. Thus, S&T appropriation account funds most EPA research. The Agency's efforts using S&T funds are conducted through extramural contracts, grants, and cooperative agreements with universities, industries, other private commercial firms, nonprofit organizations, state and local government, and Federal agencies, as well as through intramural work performed at EPA's laboratories and various field stations and field offices. The S&T Appropriation account funds activities such as developing and improving sampling and analytical methods and instruments for measuring pollutants; determining the effects of pollutants on human health, ecosystems, and the general environment; researching the processes that relate to pollution; evaluating technologies for preventing and controlling pollution; and developing guidelines and research tools to improve risk assessments. The S&T Account also provides operating expenses for most Agency research facilities. This includes categories such as personnel salary & benefits, laboratory supplies and materials, operation and maintenance of lab facilities, equipment, Information Technology (IT) support, human resource development, and printing. Beginning in FY 1996, this account also funds Hazardous Substances research appropriated in the Superfund Account and transferred to the S&T appropriation account. The appropriated Superfund funds are available for obligation for only two (2) years once transferred into the S&T account. c. Office of Inspector General (OIG) This appropriation provides funding for EPA audit and investigative functions and program evaluations to identify and recommend corrective actions of management, program, and administrative deficiencies which create conditions for existing or potential instances of fraud, waste, and mismanagement. The audit function provides contract audit, performance audit, and financial audit services. Contract audits provide professional judgments, findings, and recommendations to Agency contracting officials on accounting and financial matters relative to negotiation, award, administration, repricing, and settlement of contracts. Performance audits review and evaluate all facets of Agency operations. Grant audits focus on the effectiveness of individual projects, reasonableness of costs, and adequacy of management systems. The investigative function provides for the detection and investigation of improper and illegal activities involving programs, personnel, and operations. In addition to program costs, this account funds PC&B, travel, and administrative costs associated with the OIG program. 35 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 There are historically two sources of funds for the budget authority in the OIG account: a.) General Revenues, b.) the Superfund Trust Fund. Although the SF appropriation is provided to EPA from the SF Trust Fund as a no-year appropriation, the appropriated Superfund funds are available for obligation for only two (2) years once transferred into the IG account. The Agency's financial coding structure ensures that both OIG sources of funds are tracked separately to provide proper accounting. Budget authority that is not obligated during the fiscal year is not "drawn down" from the respective funding source. 3. No-Year Appropriations are available for obligation without fiscal year limitation. They remain available until expended, rescinded or otherwise withdrawn. In order for an appropriation to be no-year, it must be expressly stated as such in the appropriating language. EPA's no-year appropriations are: a. Hazardous Substance Response Trust Fund (Superfund) The Superfund appropriation is provided to carry out the legislative mandates of CERCLA as amended by SARA by addressing the problems of uncontrolled hazardous waste sites and spills. The legislation mandates that EPA (1) provide emergency response to hazardous waste spills; (2) take emergency action at hazardous waste sites that pose an imminent hazard to public health or environmentally sensitive ecosystems; (3) engage in long-term planning, remedial design, and construction to clean up hazardous waste sites where no financially responsible party can be found; (4) take enforcement actions to require responsible private parties to clean up hazardous waste sites; and (5) take enforcement actions to recover costs where the fund has been used for cleanup. In addition to program costs, this account funds PC&B, travel, and administrative costs associated with the Agency's Superfund program. b. Leaking Underground Storage Tanks Trust Fund (LUST) The LUST Appropriation Account is provided to carry out the legislative mandates of SARA by conducting corrective action for releases from leaking underground storage tanks containing petroleum and other hazardous substances. EPA implements the LUST Program through state cooperative agreements which enable states to conduct corrective actions to protect human health and the environment. The trust fund is also used for enforcement by forcing responsible parties to finance corrective actions and by providing the states with the authority to recover costs from responsible parties for state funds expended for cleanup of abandoned tanks. The Energy Policy Act of 2005 authorized the use of funds contained in the LUST Trust Fund for leak detection, prevention, related inspection and enforcement activities. However, Congress must also appropriate funds from the LUST Trust Fund for these purposes for EPA to use LUST appropriations to carry out the Energy Policy Act. In addition to program costs, this account funds PC&B, travel, and administrative costs associated with the Agency's LUST Program. c. Buildings and Facilities (B&F) Appropriation Funds are appropriated to EPA's Buildings and Facilities Account each year to cover the necessary major repairs and improvements to existing installations which house the Agency. This appropriation also covers new construction projects when authorized. Minor repairs and improvements to existing 36 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 installations are usually funded by the EPM and S&T appropriations as authorized by the annual appropriations act. d. Oil Spill Liability Trust Fund This Appropriation Account, authorized by the Federal Water Pollution Act (FWPA) and amended by the Oil Pollution Act (OPA) of 1990, provides funds for preventing and responding to releases of oil and other petroleum products in navigable waterways. EPA is responsible for directing all cleanup and removal activities posing a threat to public health and the environment; conducting inspections, including inducing responsible parties to undertake cleanup actions; reviewing containment plans at facilities; reviewing area contingency plans; pursuing cost recovery of fund-financed cleanups; and conducting research and oil cleanup techniques. Funds are provided through the OSLTF established by the OPA and managed by the U.S. Coast Guard. In addition to program costs, this account funds PC&B, travel, and administrative costs associated with the Agency's Oil Spill Program. e. State and Tribal Assistance Grants (STAG) Appropriation The State and Tribal Assistance Grants (STAG) appropriation includes three components: (1) Infrastructure Grants including State Revolving Funds (SRF), (2) Categorical STAG Grants, and (3) other specified grant programs (i.e., Alaska Native Villages, Diesel Retrofits, and work along the Mexican Border). Funding for the SRFs comprise the largest part of the STAG account. These funds are used to capitalize revolving loan funds in each state which provide loans to municipalities for major wastewater and drinking water infrastructure projects. There are two types of water infrastructure SRFs: Clean Water SRF (CWSRF) and Drinking Water SRF (DWSRF). The states loan these funds to municipalities forthe infrastructure projects, who then pay back their loan by making payments back into the state SRF account. The state can then make more loans (hence the term "revolving") to other municipalities. The Water Quality Act of 1987 (WQA) reauthorized the "construction grants" program through 1990 and provided for its phase-out and replacement with a State Revolving Fund (SRF) program, to be capitalized by grants to the States.] Categorical State and Tribal Assistance Grants (STAG) provide financial assistance to states and tribes in numerous environmental categories by program. These grants help states and tribes develop the technical, managerial, and enforcement capacity to operate the environmental programs that monitor drinking water systems, implement water quality standards, combat air pollution, promote the use of safer pesticides, manage hazardous waste, and assure compliance with Federal environmental laws. In addition, Categorical STAG funds are available in specified amounts appropriated for certain grant programs identified in the statute. The Omnibus Rescissions and Appropriations Act (ORAA) of 1996 (P.L. 104-134) provided EPA permanent authority within the STAG account to award Performance Partnership Grants (PPGs). PPGs permit states and tribes to combine STAG "categorical grants" (i.e. air, water) into one or more grants, to be used for addressing the unique priorities of each state or tribe. PPGs were created to reduce the burden on and increase the flexibility for state and tribal governments that need to manage and implement their environmental protection programs, and at the same time produce the results-oriented performance necessary to address the most pressing concerns and achieve a clean environment. 37 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 CHAPTER 2: ROLES and RESPONSIBILITIES OR FUNDS CONTROL There are a number management and staff levels involved with funds control at EPA (for an illustration showing the relationships of these, see Exhibit 2520-2-1). The positions associated with funds control within EPA range from National Program Managers (NPMs) to funding document originators. This section will briefly describe the roles and responsibilities of each of these key players regarding funds control and focus mostly on the Funds Control Officers (FCOs). All levels of responsibility for funds control should ensure that no expenditures be authorize or created as an obligation under any appropriation or fund in excess of the amount available [31 U.S.C 1341 (a)]. All personnel responsible for administrative control of funds should familiarize themselves with the following legal requirements found in: a. Antideficiency Act (31 U.S.C. 1341 (a); b. OMB Circular A-11, Part 4; and c. EPA's Administrative Control of Appropriated Funds Manual (RMDS 2520). I. PARTICIPANTS: A. ASSISTANT ADMINISTRATORS (AAs), NATIONAL PROGRAM MANAGERS (NPMs), and RESPONSIBLE PLANNING AND IMPLEMENTATION OFFICERS (RPIOs) The Administrator and the twelve (12) Assistant Administrators (AAs) in headquarters are National Program Managers (NPMs) who control resources. These thirteen (13) NPMs, who are normally political officials, formulate budgets for EPA's national programs and offices including the regional program components. NPMs responsibilities include planning, formulating, and justifying budgets for national EPA programs, making adjustments to national program budgets (e.g., headquarters/regional splits) as needed, and preparing program operating guidance. For example, the AA for the Office of Water has national budget responsibilities for the entire EPA Water Program. The Responsible Planning and Implementation Officers (RPIOs) are the 24 EPA senior managers responsible for planning and implementing operating plans, using and accounting for resources, and reviewing programs. This consist of 24 individuals who are the Administrator, the (12) headquarters Assistant Administrators, including the Inspector General, and the ten (10) Regional Administrators. Each RPIO has program operations to administer and a budget to execute. In terms of properly utilizing funds for the purpose for which they were appropriated, the RPIOs, their Allowance Holders (AHs), and FCOs bearsole responsibility. No other Agency organizations are fully aware of the obligating activities and the decisions behind them that transpire on a day-to-day basis. , The RPIOs are presumed to be the most knowledgeable EPA entity regarding what is permissible in the authorizing statutes for their programs. Additionally, the RPIOs are active participants during the process of budget formulation, the OMB submission, the Congressional Justification, and all subsequent stages of the legislative history behind the appropriations act. They receive copies of the House, Senate, & Conference Committee Appropriation Reports and are kept informed of what is in the Public Law for their programs. TheOGC is available to assist them in any interpretation of ambiguous language. The actions taken by the RPIOs' in executing their portion of the budget is subject to audit and review by the OIG, GAO, Congressional Committees, Agency management, etc. RPIOs are held accountable responsibility for the utilization of their funds. 38 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 B. REGIONAL ADMINISTRATORS (RAs) Each Regional Administrator (RA) is both a Responsible Planning and Implementation Officer (RPIO) and an Allowance Holder (AH). RAs are not NPMs since they have a primary responsibility for regional, not national, administration and budget execution for all programs in the states and territories within their region. RAs coordinate on budget formulation and execution with NPMs and present regional budget planning concerns through the Lead Region process. Lead Regions are designated for each major program (Water, Air, etc.) and they are responsible for representing the designated program with the appropriate NPM in developing priorities, budgets, and work year estimates for the regional program components. Lead Regions are rotated every two years and are also responsible for working with their respective NPM to identify and synthesize the issues of all ten (10) regions into a "regional view" that can be effectively factored into Agency decision-making. The list of Lead Regional Coordinators can be found at http://www.epa.gov/regional/leadregionprocess.htm. NPMs are responsible for soliciting and using this contribution from their Lead Region on major decisions. As RPIOs, Regional Administrators are responsible for overseeing the execution of their allowances and for the review of budget reprogrammings before they are sent to the Office of Budget (OB). In carrying out his or her responsibilities, a RA typically depends heavily upon their Assistant Regional Administrator (ARA) and an individual in the ARA's office who serves essentially as a Budget Officer. In many Regions, this individual is the Regional Comptroller. C. SENIOR RESOURCE OFFICIALS (SROs) DEPUTY ASSISTANT ADMINISTRATORS (DAAs)/ ASSISTANT REGIONAL ADMINISTRATORS (ARAs) The SROs are Senior Executive Service (SES) managers who are designated by and report to the Administrator, the 10 RAs, the GC, the Inspector General, and nine AAs. Additionally, one SES manager is designated by the Deputy Administrator for the Office of the Administrator (O A). The CFO approves all SRO designations upon initial designation, and annually thereafter. In line with the CFO Act (CFOA) of 1990, SROs must have the knowledge, skills and abilities in resource management necessary for the position. SROs are typically Deputy Assistant Administrators (DAA) and Assistant Regional Administrators (ARAs). The SRO is accountable for the Headquarters Office's or Region's, effective resource management, including acquisition, assistance, budget, financial management and management integrity. SRO accountability, like the accountability of other EPA managers and officials, cannot be delegated, even if SRO functions are delegated. When SROs are temporarily absent, the individual acting forthe SRO must be appraised of SRO responsibilities. In cases where a resource requirement may involve more than one program or Regional Office, the SROs of all affected offices share responsibility. While the SROs are accountable for resource management in their respective Headquarters Offices or Regions, the CFO has overall responsibility for these resources. Specifically, the SROs: 1. advise the CFO on fiscal resource management issues, including acquisition, assistance, budget, financial management and management integrity. Extramural resources within this scope include contracts, simplified acquisitions, grants, loans, and cooperative and interagency agreements; 2. oversee, assess and advocate accountable fiscal resource management; 39 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 3. ensure compliance with fiscal resource management laws and regulations while furthering program mission; 4. ensure appropriate and effective systems, procedures, management controls, communication and outreach are in place for accountable fiscal resource management; 5. ensure appropriate and effective planning, assessment, monitoring and control for accountable fiscal resource management; 6. ensure that assistance and acquisition mechanisms are used for work appropriate to their purposes; 7. review and approve the following extramural management actions and funding requests. SRO concurrence is required for all: a. requests for contract advisory and assistance services; b. procurement requests (PRs) not including requests for incremental funding over $1 million and; c. agreements for Federal funding assistance when total project costs are expected to be $5 million or more for continuing program grants and over $1 million for project grants. 8. ensure - by working through established organizational structure - that program or Regional resource managers [e.g., Contracting Officer Representatives (CORs), project officers (POs), work assignment managers (WAMs), delivery order project officers (DOPOs); grants management officers; funds control and financial management officers; and their supervisors: a. are working within their workload limitations; b. have Agency-required training and experience, and receive appropriate program or office-specific training that is available; and, c. have appropriate resource management responsibilities in their position descriptions and performance standards. 9. manage and certify completion of the Annual Review of Unliquidated Obligations for current and prior year travel and simplified acquisitions, as described in Chapters, Part IV.A. D. SENIOR BUDGET OFFICERS (SBOs) In Headquarters, Senior Budget Officers (SBOs) greatly assist the NPMs and SROs in carrying out the responsibilities listed previously and serve as the primary liaison between the Office of Budget (OB) and the Allowance Holders (AHs). The SBO: 1. has the lead role for managing the budget formulation process on behalf of their HQ NPM; 2. usually has the lead role in coordinating the budget execution activities for their HQ RPIO; 3. reviews, approves, processes or forwards budget reprogrammings and coordinates with the Office of Budget (OB) as needed; 40 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 4. reviews each Allowance Holder (AH) Operating Plan (Op Plan) and spending utilization to ensure that funds controls and program goals are being met; and, 5. manages the review of Headquarters current year unliquidated obligations to determine their validity and viability, as required by the CFO. E. REGIONAL COMPTROLLERS The Regional Comptroller serves as the Region's manager on all matters related to budget and finance responsibilities and functions. This position is the primary point of contact for the OCFO (Office of Budget Office, Office of Financial Management, and Office of Planning, Analysis and Accountability) and National Program Managers on regional budget and financial matters. This position is also analogous to the Senior Budget Officer, however, on the Regional level yet works with the Senior Budget Officer when addressing national environmental program issues. The Regional Comptroller is responsible for: 1. coordinating budget formulation and execution processes and decisions on resources (dollars and FTEs) at the Regional level; 2. managing the execution of the budget at the Regional level following Agency fund control policies, guidelines, and procedures; 3. oversees utilization of Regional resources and prepares reprogramming requests as necessary; 4. ensuring resources are utilized according to government-wide and Agency budget and financial policies and procedures; 5. accounting and reporting on resource utilization according to Agency and government-wide financial accounting standards and policies; 6. manages Regional data systems to account for resources and coordinates with centralized Financial Servicing Offices (FSOs) on payments of payroll, contracts, grants, assistance agreements, and Superfund activities. Works with Headquarters Office of Financial Management (OFM) on IFMS financial policy and accounting issues. 7. maintains close working relationship with Regional Grants Management Offices to facilitate proper and timely award of Agency grants; 8. manages the review of unliquidated obligations with all Regional offices to facilitate timely expenditures of Regional resources. 9. serves as the Regional point of contact for budget and financial investigations audits on the use of Regional resources. F. REGIONAL BUDGET OFFICERS The Regional Budget Officer (RBO) serves as the Region's point of contact on all matters dealing with budget formulation, operating plan development, and budget execution. In both areas, the RBO must communicate with HQ NPMs and OB on all budget matters, especially with regard to furnishing information and advice on Regional programs and objectives. 41 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 During budget formulation, the Regional Budget Officer (RBO) oversees all aspects of the Region's budget by appropriation, program results code and budget object class for the inclusion in the Agency's OMB Submission. This includes: 1. developing regional resource requirements for budget outyears; 2. reviewing budget requests submitted by regional managers and negotiating budget changes with pprogram managers and HQ budget officials by explaining and advocating regional position on budgetary issues; 3. leading regional managers in developing, justifying, and recommending budget allocations; 4. evaluating variances and trends within various appropriations to ensure consistency among programs, and recommend corrective actions where discrepancies arise; 5. establishing and implementing an annual process by which dollars and FTE work years are allocated within the Region so that programs can effectively carry out their requirements; and 6. working closely with Lead Region Coordinators . During budget execution, the Regional Budget Officer (RBO) serves as the primary funds control custodian. The RBO ensures that all regional FCOs are familiar with the Agency's budget structure trained, and have a general knowledge of appropriation law. During the budget execution phase thermo: 1. oversees the preparation of suballowances for regional responsibility centers in accordance with approved regional budget request; 2. analyzes and makes recommendations on the best means of maximizing resource for payroll, travel, expenses, contracts, and grants; 3. monitors utilization of funds to ensure program funds are utilized for intended purposes at the allowance holder, program results code, and appropriation level, to include the monitoring of any allowance holder ceilings and floors; 4. conducts quarterly budget reviews with Division Directors to ensure compliance with approved operating plan; 5. recommends and initiates reprogramming of funds and FTE work years to ensure program objectives are met, as well as accommodate unplanned requirements; and 6. reviews and approves Allowance Holder reprogrammings. 7. ensures implementation of budget tracking codes for special budgets (e.g., required RPIO/Activity Codes) and the monitoring of spending to comply with HQ guidances; and, 8. coordinates development of regional IT budget projections for outyear budgets and the implementation of IT coding to track expenditures to this budget. 42 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 G. ALLOWANCE HOLDERS (AH) Many Headquarters and Regional Program Directors, and staff directors, are Allowance Holders (AHs). The Office of Budget (OB) issues allowances to (AHs) to support their programs, thereby giving these officials the day-to-day responsibility for controlling EPA's funds. AHs or their designees are responsible for: 1. ensuring that funds control practices within their organizations do not violate federal laws, directives and EPA policies; 2. verifying proper funds certification and funds availability before an obligation is incurred. Funds must be available for purpose, time and amount. The AH is responsible for ensuring that the AH's FCOs are familiar with the organization's budget structure and budget justification, as well as have general knowledge of appropriations law; 3. adhering to any established ceilings, floors, and other limitations in addition to total AH appropriation levels, these may include travel, administrative and work year ceilings, PC&B floors, etc.; 4. maintaining complete and up-to-date funds control records, including prompt entry of commitments into the Integrated Financial Management System (IFMS); 5. prompt and consistent monitoring to ensure that spending transactions are recorded in the IFMS correctly. Also, monitoring the status of open transactions and verification of products and services received against invoices to ensure that payments are made correctly. Any errors identified must be promptly corrected; and, 6. completing an annual review of all unliquidated obligations and taking action to cancel any invalid obligations that are found. The review is initiated by the Office of Financial Management and is a requirement of the General Accountability Office (GAO). The AH must formally designate FCOs and alternates in writing and submit this list to the Office of Budget OB annually. Any change in FCO designations must also be reported to OB as soon as possible. An example of this document is included as Exhibit 2520-2-2. The FCO designation forms encourage RPIOs to identify the specific Responsibility Centers (RCs) for which an FCO has authority to perform the functions listed below. If local office managers are going to ask FCOs to perform those functions for an RC outside of their designation (such as when one FCO is filling in for another), the FCO may not be sufficiently familiar with the status of funds for that RC to adequately fulfill those functions. It must be the responsibility of those local managers to determine how such instances will be transacted and if they should be transacted at all. Certainly, no FCO has authority to perform the functions below for an RC for which they have not been designated without direct orders from a local manager. H. FUNDS CONTROL OFFICERS (FCOs) In smaller organizations, the Funds Control Officer (FCO) is usually in the immediate office of the Allowance Holder. In larger organizations, where an AH's organization is subdivided into Responsibility Centers (RCs) more than one FCO may perform the daily tasks necessary for controlling funds at the sub-allowance or RC level. 43 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 An FCO's scope of responsibility also may vary between that of an FCO located in Headquarters, and that of an FCO in the Regions. In either location, the FCO is either directly responsible for, or subject to coordinating with other personnel on the following duties: 1. serving as the central point of contact for all budgetary/financial information on funds control for payroll, travel, and procurement of goods and services (i.e. checking available balances in a PRC & budget object class by appropriation); 2. certifying the availability of funds as to the correct purpose, time, and amount; 3. ensuring that all financial transactions are in compliance with any funds availability ceilings and floors; 4. ensuring the accuracy of accounting data of spending documents to include all financial data and accounting elements cited are correct, as well as appropriation codes, account numbers, object class codes, and signatures; 5. identifying the need to reprogram funds in advance; 6. entering the spending actions/commitments into IFMS and forwarding the spending document to the appropriate office for subsequent obligation; since grant project officers enter grant commitments into IGMS which are transmitted into IFMS, FCOs are required to ensure grant commitments are correct and reviewing grant project officers correct any errors in IGMS. 7. ensuring that once the funds have been committed, the funds will not be altered, revised, or withdrawn prior to obligation without advance notice to the proper obligating official; 8. ensuring that funds are properly obligated for correct amount and that any unobligated funds are decommitted if necessary, and recertified if needed for future obligations; 9. monitoring utilization of program funds through the use of financial management reports. Keeps Allowance Holders informed on status of appropriations; 10. maintaining proper records of all Document Control Numbers (DCNs) for the AH; 11. maintaining constant communication with document originators and Servicing Finance Offices (SFOs) to facilitate the reconciliation of funding documents; and, 12. performing fiduciary responsibilities by conducting unliquidated obligation reviews (close-out of funding documents) and coordinating with SFOs in deobligating and recertifying of unused funds. In many cases the FCO serves as the organization's expert on program funding policies and procedures, management of any ceilings and floors, criteria for object classification, etc. and has been assigned many of the same responsibilities as listed above for AHs. Many FCOs provide or arrange for assistance and training for the organization staff, distribute guidance materials for staff direction, and protect the organization from problems and errors in the commitment and obligation of funds. See APPENDIX 2520-B for a Checklist of Good Fund Control Practices and APPENDIX 2520-C for Suggested Qualifications and Training for FCOs. 44 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 I. ORIGINATOR The originator of a spending action may be any EPA employee having the need to obtain goods or services. Examples include branch secretaries ordering supplies or branch staff entering into program contracts for which they will be the Work Assignment Manager (WAM). In some cases, originators are required to attach a written justification in order to spend funds for a specific activity or to use a specific appropriation, object class, or program results code. Originators will have varying degrees of knowledge regarding funds control and budgeting/accounting policies and procedures. Some originators have branch budgets, know the proper accounting entries for their documents, and enter the accounting data on their documents. In other cases, they must depend upon their FCO to enter all financial accounting data. J. APPROVING OFFICIAL An approving official's signature appears on each spending document in addition to the document initiator and the FCO. Generally, the approving official is a Division Director and/or Allowance Holder (AH). Unlike the FCO, whose signature indicates technical correctness, the approving official's signature indicates a management decision to make the commitment of resources. Depending upon management preferences and the established procedures in a particular office, the spending document may be routed to the FCO either before or after the approving official. In others, the FCO may see the document twice, once to review for accuracy and/or funds availability before the approving official signs it, and again afterwards to actually assign the DCN and enter the commitment into IFMS. The dollar value of the document may also affect the levels of approving official signatures that will be required. For instance, a Division Director (at the RC level) may have authority to sign for amounts up to a certain threshold, but the Office Director's approval (the AH) is needed for greater amounts. It is the FCOs responsibility to know the organization's internal policies and procedures governing such levels of authority and approvals and ensure that the proper signatures are obtained. K. OBLIGATING OFFICIALS The authority to enter into an obligation is limited to certain designated individuals known as "obligating officials". It is illegal for any non-designated individual to obligate the government to pay for a delivered good or service ordered. At EPA, the obligating officials for the majority of transactions are located in specific offices in OARM. Examples of these offices and the obligation types they handle include: Office of Acquisition Management (QAM) Contracts, simplified acquisitions Office of Grants & Debarment (OGD) Grants, interagency agreements, cooperative agreements Office of Human Resources Management (OHRM) Training agreements Additionally, there are situations where designated local officials have delegated authority to incur obligations (obligating official function). These include employees like Division Directors who approve travel and are the Approving Official for Purchase Card ordering officers. There is a distinct difference between certifying the availability of funds (FCO function) and incurring legal obligations. After commitment into IFMS, FCOs forward funding documents to the obligating official to incur 45 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 the legal obligation on behalf of the government. An obligation legally binds the government to pay a supplier for delivery of goods or services or to provide funds under an assistance agreement. It is the responsibility of the Obligating Officials to: 1. return documents to the AH if they discover funding errors (such as expired funds) that should not be obligated as submitted; 2. immediately forward accurate and complete documentation to the appropriate Financial Management Officer (FMO) to record the obligation in IFMS; and 3. communicate with contracting officer representatives (COR regarding insufficient funds, contract modifications, contract overruns, etc. L. OFFICE OF THE CHIEF FINANCIAL OFFICER (OCFO) The OCFO, under the supervision of the Chief Financial Officer (CFO), is responsible for developing, managing, and supporting a goals-based management and accountability system for the Agency that involves strategic planning and accountability for environmental, fiscal, and managerial results. A current organizational chart of OCFO can be found on the Agency's intranet at: http://intranet.epa.gov/ocfo/about/org.htm Under the Chief Financial Officers Act of 1990, the OCFO is responsible to bring more effective general and financial management practices to the Federal government, improve systems of accounting, financial management and internal controls, and provide for the production of complete, reliable, timely and consistent financial information. The Act also requires a Presidentially appointed, Senate confirmed CFO and the appointment of a career SES Deputy CFO in each major executive department and agency. There are seven (7) primary implementation areas for which the CFO is responsible. These are: 1. Annual Audited Financial Statements 2. Annual Reports 3. An Agency Five-Year Financial Management Plan 4. Financial Management Personnel 5. Financial Management Systems 6. Performance Measures 7. Agency User Fees To complete its mission, the OCFO is organized into five (5) offices which are: 1. Office of Planning, Analysis, and Accountability (OPAA), 2. Office of Budget (OB), 3. Office of Financial Management (OFM), 4. Office of Financial Services (OFS). 5. Office of Enterprise Technology and Innovation (OETI) To view the complete formal list of the many areas for which the CFO is responsible, go to the site of the CFO mission and description of functions at: http://intranet.epa.gov/ocfo/about/functions.htm 1. Office of Planning, Analysis, and Accountability (OPAA) 46 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 To facilitate the requirements of GPRA, the Office of Planning, Analysis, and Accountability (OPAA) is responsible for developing, managing, and supporting a goals-based management system for the Agency that involves strategic planning and accountability for programmatic and managerial results. OPAA works with the Office of Budget (OB) to integrate goals-based decision making into the allocation of Agency resources through multi-year and annual planning in the annual budget process. OPAA has primary responsibility for managing ORBIT, OCFO's Reporting and Business Intelligence Tool. ORBIT is a financial, operations, and human resources reporting system using a query, reporting, and analytical software package designed to support the use of information in making financial and programmatic business decisions across the Agency. 2. Office of Budget (OB) The OB Director is the Allotment Holder (ALLH) for all Agency resources and issues Advices of Allowance in accordance with the Operating Plan (Op Plan) to EPA AHs. The Allotment Holder is legally accountable for assuring that obligations are made in accordance with statutory requirements and that spending authority is not exceeded. The OB is the responsible authority for budget formulation and budget execution activities forthe agency. These activities include reviewing (Op Plan) reprogramming requests, monitoring resource utilization, ensuring the application of appropriations laws and OGC or Comptroller General Comp Genlegal opinions pertaining to Agency Allotments, and providing directives, guidance, and support to assist (AHs) in fulfilling their own responsibilities Office of Budget The OB manages and operates the Budget Automation System (BAS) which serves as the primary agency-wide budget formulation database. 3. Office of Financial Management (OFM) OFM is responsible for ensuring Agency compliance with the Chief Financial Officers Act of 1990 and the Federal Managers Financial Integrity Act (FMFIA) of 1982, and the CFO Act of 1990. The CFO Act requires preparation and audit of financial statements to ensure accountability and fair presentation of government resources, as well as decision support. The OFM meets these responsibilities by developing, implementing, and maintaining agency-wide financial systems, providing end user training, and issuing accounting policies, as well as provide training and support for users. The FMFIA requires Agencies to protect government resources against fraud, waste, abuse or mismanagement through systematic self-evaluation of management controls, and to report material weaknesses in management controls with corrective action plans annually to the President and Congress. . 4. Office of Financial Services (OFS) The Office of Financial Services-(OFS) is responsible for accounting and financial services at 4 locations: (1) Washington, DC, (2) Research Triangle Park, NC, (3) Las Vegas, NV, and (4) Cincinnati, OH. The OFS also has national responsibility for processing, accounting, reconciling & reporting of the Agency's biweekly payroll. 5. Office of Enterprise Technology and Innovation (OETI) OETI is responsibility for information technology planning, standard setting, development and deployment of the OCFO and Agency's resources and financial management systems. This 47 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 includes all aspects of program analysis, formulating and overseeing implementation of a strategic approach to Agency-level technology investment planning, budgeting, development and implementation of agency-wide and OCFO financial systems and policies that effectively and efficiently support achievement of the Agency's environmental mission. M. FINANCIAL MANAGEMENT OFFICERS (FMOs) Each Financial Management Officer (FMO) manages a Servicing Finance Office (SFO) and is responsible for all standard accounting functions. These functions primarily include the posting of the obligation into IFMS, managing accounts receivable and accounts payable, reporting, and providing support to program offices in reconciling accounting data problems and discrepancies. There are four FMOs located in four Financial Management Centers (FMC): Research Triangle Park, NC (RTP FMC), Las Vegas, NV (LV - FMC), Cincinnati, OH (CFMC), Washington, D.C. (WFMC). The four FMCs have nationwide responsibilities for managing all of the agency's financial management transactions. Each FMC services all AHs as follows: • Contracts and simplified acquisition, RTP-FMC • Grants, assistance agreements, LV-FMC • Interagency Agreements (lAGs), travel, and Purchase Card functions, C-FMC • Time and labor administration and labor distribution, W-FMC. Exhibit 2520-2-3 lists the addresses of the four SFOs and their complete scope of responsibilities. Starting in FY2006, the agency entered into an inter-agency agreement with the Department of Defense's Finance and Accounting Services (DFAS) for the processing the agency's payroll.] In carrying out accounts payable responsibilities for simplified acquisition, RTP FC receives invoices from suppliers for payment. Before the FMO may pay the supplier, it must have an obligating document and a receiving report (sent by the originating office) to verify that the work was completed or the goods were received satisfactorily. Unpaid obligations are not removed from IFMS at the end of the fiscal year. Rather, they remain in the system until paid or until the Allowance Holder or obligating official notifies the FMO that no further payments will be made against the obligation. N. ACCOUNTS PAYABLE CERTIFYING OFFICERS and DISBURSING OFFICERS Accounts Payable Certifying Officers should not be confused with agency Funds Control Officers (FCOs) discussed earlier in this chapter. In many federal agencies, different government officials make "certifications" of one type or another on documents, but this does not make them "Certifying Officers " for purposes of accountability and financial liability. The accountability of public funds rests primarily with the Certifying Officer, is usually located in an agency's accounting department (EPA's SFOs) and are responsible in two areas of budget execution: posting the obligation from funding documents into IFMS and certifying contractor bills for payment. Certifying Officers move funds from a commitment to an obligation in IFMS upon receiving the signed obligating document (Contract, Purchase Order, Cooperative Agreement/Grant, Training Form, etc.). If there is no signature from an obligating official on the funding document, the obligation WILL NOT get posted. In regard to certifying bills for payments, Certifying Officers will first coordinate with Agency Project Officers (POs), Work Assignment Managers (WAMs) or Delivery Order Project Officers (DOPOs) in first getting their approval for paying an invoice. However, despite receiving a PO/WAM/DOPO's approval for paying an invoice, the Certifying Officers are still the ones that are ultimately held accountable. As required by 31 U.S.C. 3528, a Certifying Officer will be held accountable for: 48 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 1. the existence and correctness of the computations and facts stated in a voucher and its supporting records; 2. the legality of a proposed payment with the appropriation or fund involved; 3. returning payment vouchers that are inadequately documented; and 4. the correctness of computations on the voucher. 31 U.S.C. 3528 also provides that Certifying Officers will be accountable for the amount of any "illegal, improper, or incorrect" payment resulting from his or her false or misleading certification. This includes any payments prohibited by law, or payments which do not represent a legal obligation under the appropriation or fund involved. Since there is a high degree of accountability placed on Certifying Officers, under EPA Order 2515.1, [Policy and Procedures for Relieving Certifying and Disbursing Officers From Liability (March 17, 2000)], they have the right to seek and obtain an advance opinion from the EPA Office of General Counsel regarding the lawfulness of any payment to be certified. Beyond that, the statute allows fora GAO opinion. As previously noted, the Office of Legal Counsel (OLC, U.S. Department of Justice (DOJ) has opined that 31 U.S.C. 3528(b), which purports to authorize the (Comp Gen) to relieve certifying officers from liability, and 31 U.S.C. ' 3529, which purports to authorize the Comp Gen to issue advance opinions on the legality of payments, are not consistent with our Constitution's separation of legislative and executive powers. Memorandum for Janis A. Sposato, General Counsel, Justice Management Division, from John O. McGinnis, Deputy Assistant Attorney General, Office of Legal (OLC) (Augusts, 1991) (McGinnis Memo). Only DOJ has prosecutorial authority to initiate a court proceeding to hold a certifying officer liable for an illegal or improper payment. OLC has stated that DOJ will "not bring suit against [a certifying] official to recover a payment if that official has obtained from his or her component general counsel. . .an opinion advising him orherthatthe payment could legally be made."(McGinnis Memo at p. 7.) OLC is responsible for providing legal advice to the President and the heads of Executive departments and agencies. Its decisions are binding on Executive Agencies unless a court rules otherwise. A Disbursing Officer is an employee of a federal agency designated to disburse public funds. Like most federal agencies, EPA does not have any disbursing officers located within the agency; instead, most of the federal disbursing officers are located in the Department of Treasury. A disbursing official shall disburse money only as provided by a voucher certified by the head of the agency or by an authorized certifying official. O. OFFICE OF GENERAL COUNSEL (OGC) Based on the traditional attorney/client function, OGC staff is frequently involved in providing advice and counsel in all areas of Agency activity pertaining to appropriations law, funds control, and financial management. OGC staff opine both formally and informally on EPA's behalf in the interpretation of EPA's authorizing and appropriations language, the legislative history, and government-wide statutes. EPA employees may rely on Comp Gen decisions as useful sources of appropriations law in conducting their day to day activities. However, if a Certifying Officer or Disbursing Officer is facing the possibility of personal liability, an OGC opinion can be relied on by such officials. (EPA Order 2515.1, Paragraph 4.a., Policy.) 49 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 CHAPTER 3: BUDGET EXECUTION PROCESS I. ACCOUNT CODE STRUCTURE AT EPA After the annual appropriations act becomes a public law, EPA must implement or enact this act within the Agency. Budget execution involves a great deal of structured coding, some of it from the Treasury and OMB, in order to conduct automated financial accounting to provide prudent stewardship of and report on the use of all funds. This coding, when entered in the 6 Integrated Financial Management System (IFMS) account fields, forms unique records which capture the detailed accounting information that is required by the Agency and for government-wide standards and reporting. These records drive the integrated budgeting and accounting features in the IFMS. This section covers the account structure and coding at EPA. This section will be revised extensively in the near future after EPA decides on the Agency's new financial management system.] A. 6-FIELD IFMS ACCOUNT CODE The IFMS has been processing a 6-field IFMS account code nightly since its installation in 1989. Added together, the 6 fields have a maximum character length of 41 -characters. From FY1989 to FY1994, older Agency sub-systems and interface systems continued to use a 10-digit fixed account code which did not fully utilize the capability of the IFMS code space. FY 1995 was a year of transition as the Agency began to utilize the added capabilities of the 6-field IFMS account code for budgeting and accounting. Definitions and guidance in the use of the 6-field IFMS account code since FY 1996 are outlined in this Chapter. The following explanation refers to FIGURE-2 and reflects additional expansion into available character space for new capabilities beginning in FY1996. The following is a description of each of the six fields that comprise the IFMS account code: 1. BUDGET FISCAL YEAR (BFY) FIELD The Budget Fiscal Year field is processed by IFMS as two-character fields in the IFMS account code. The first two characters represent "beginning budget fiscal year" and the second two characters represent the "ending budget fiscal year." In FY 1996, the Agency began using the first two characters of the field for all single-year and no-year funds. For two-year funds, however, the Agency began using all four characters to take advantage of IFMS capabilities to automatically carry over two-year funding. Data entered into these fields is validated against the FUND table in IFMS. The FUND table is controlled and maintained by the Office of Budget (OB). CHARACTER LOCATION/USE (S): 1 & 2 Beginning Budget Fiscal Year 1 & 2 Ending Budget Fiscal Year (2-Year funds only) 2. FUND FIELD (APPR): The FUND (or Appropriation) field is processed by IFMS in a 6-character string as the second of six character fields. The first two characters of this field indicate appropriations/accounts and sub-accounts. 50 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 CHARACTER LOCATION/USE (S): J_ Appropriation/account (1 character) (corresponds to a Treasury symbol) _2_ Appropriation sub-account (1 character) Identifies specific portion of an appropriation account (e.g. reimbursable authority) 3 4 Restricted use for Receipt Accounts or other OB specified unique accounts 5 6 Reserved EXAMPLES: T = SF New Obligational Authority (NOA) TR = SF Reimbursable T2 = SF IG C = Science & Technology (S&T) CR = S&T Reimbursable The complete list of current Appropriations codes for EPA is included as Exhibit 2520-3-1. Data entered into this field is also validated against the FUND table in IFMS. The FUND table is controlled and maintained by the Office of Budget (OB). 3. ORGANIZATION FIELD (ORG): The organization (or allowance holder) field is processed by IFMS in a 7-character string as the third of six character fields. CHARACTER LOCATION/USE(S): 1 2 A.M. code 2-char. (no other uses permitted) 3 4 A. R.C. code / blank (if nothing to follow), or B. R.C. code / zero (if more to follow), or C. R.C. code-2 char., or D. R.C. code/local option (e.g. Branch), or E. R.C. code/numeric State Code (for all State grants) 567 A. Add-on code (A/B/C/D)/2-char. Add-on #, or B. Superfund Activity codes R/E/P/S/H (if alpha allowance),/ local option 2-char., or C. Trackable Items (other than add-on) (X in char. 5) D. Reimbursable I.D. code (X in char. 2, char.6-7 map to Reim. Agreement) E. if none of the above, local option 3-char., or F. blank 51 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 EXAMPLES: 3 3 A AH/RC 0 1 1 AH/STATE (REGION I- CONNECTICUT) 3 3 A 1 AH/RC/SUB RC 4 A D 0 R SF ALPHA AH/RC/ZERO (0) SUB RC/REMEDIAL ACTION Data entered in this field is verified in the ORGANIZATION (ORGN) table in IFMS. The Operating Plan issued by the Office of Budget and shown in the Allowance Inquiry table (ALLT) does not contain the Responsibility Center code or the local option features. That information is contained in the Suballowance Spending Control Inquiry table (SASP) and Suballowance Inquiry table (SAIN). The mapping of the additional codes is included in the ORGN table in the ALLOWANCE ORG field. The ORGN table is jointly maintained by Office of Budget and the Financial Systems Staff, OFM. 52 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 IFMS ACCOUNT CODE UTILIZATION FIELD NAME/SIZE 1.BFY FIELD (2+2) 2.FUND FIELD (6) 3.0RGANIZATION FIELD (7) 4.PROGRAM FIELD (9) PROGRAM RESULTS CODE (PRC) 5.SITE/PROJECT FIELD (8) 6.COST/ORG FIELD (7) CHARACTER LAYOUT/ PRIMARY UTILIZATION 12 BFY 12 END BFY (2-YEAR FUNDS ONLY) 1 2 34 APPROP. SUB- RESTRICTED USE APPROP. (e.g. REIMBURSABLE) 56 RESERVED A.M. 3 4 R.C.I LOCAL OP. 2 3 567 A. ADD-ON CODE B. SFACTIV.CODE C. TRACKABLE ITEMS D. REIMBURSABLE I.D. E. LOCAL OPTION 56 8 9 GOAL OBJECTIVE NPM PROGRAM/AGENCY LOCAL PROJECT ACTIVITY OPTION (SPENDING ONLY) 1234 5 6 A. B. C. D. 7 8 SF ACTIV. SF REGION/SITE SF ACTIV. OPER.UNIT ********* WORKING CAPITAL FUND ******** ** INFORMATION TECHNOLOGY (I.T.) CODE *** LOCAL OPTION (TO BE DETERMINED) ** 1234567 A. CERCLIS SERIAL # B. OPPT EXTRAMURAL IT CLASSIFICATIONS C. OTHER LOCAL OPTIONS (TO BE DETERMINED) FIGURE-2 53 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 4. PROGRAM FIELD [PROGRAM RESULTS CODE (PRC): [Reflects budget architecture beginning in FY 2004] The IFMS Program Field contains what EPA calls its Program Results Code (PRC) and is processed by IFMS in a 9-character string as the fourth of six character fields. Until FY1998, EPA had Program Elements and IFMS tables may still reflect this term. In addition to what is entered into the 9-character code above, the Program Reference table (PGMT) associates behind-the-scene information to the PRC such as the title, Goal/Objective, NPM, Program Project, and Activity code. None of this information needs to be key entered as part of the PRC field for IFMS to have this information for reporting purposes. CHARACTER LOCATION/USE(S): 1 Goal (Comprises 1 character and represents the Agency's long-term Strategic Goals) 2 3 Objective (Comprises 2 characters and represents each objective under each Goal) Subobjectives were no longer coded in IFMS for budget execution beginning in FY2004. They will still be used for performance and planning and in the Budget Automation System (BAS) which serves as the primary agency-wide database during formulation of the Agency's budget.] 4 National Program Manager (NPM) Comprises 1 character and identifies the NPM associated with resources being used for a particular Goal and Objective. 5 6 Program/Project Comprises 2 characters and defines Awhat@ the Agency does based upon specific statutory authority (programs) or "what" significant tasks or problems the Agency is addressing (projects). Program/Project replaces "Key Programs" in the structure beginning in FY2004. 7 Agency Activity Comprises 1 character and represents "how" we accomplish our objectives in general terms. These "activities" are somewhat generic across all government agencies (e.g. research and development, financial assistance, program implementation, reg/policy development.) In FY 2004, the new Agency Activity code will not be loaded as part of the IFMS Operating Plan (Budget in IFMS). The IFMS Op plan PRC will be the first 6 characters of the PRC and include - Goal, Objective, NPM and Program Project. The Agency Activity code will be used in the PRC for all spending actions including fixed account numbers-all characters of the PRC. Similar to the way the four-character finance object code used for spending rolls up to the 2- character Budget Object Code, the Full PRC (Up to 9 characters if RPIO activity is included), will roll up to the 6-character PRC in the budget. 8 9 RPIO Activity Comprises 2 characters for unique reporting needs of RPIOs use. 54 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Data entered in the program field will be verified in the Program Reference table (PGMT) in IFMS. The PGMT table is maintained by the Office of Budget (OB) and contains additional information found in the following IFMS tables: IFMS Tables Information to be Found PGMT PRC PCLS [to be determined] PCAT Goal/Objective PTYP Program/Project PGRP National Program Manager (NPM) FUNG Agency Activity For more information regarding specific program results codes (PRCs), see the latest program/project descriptionbook at the EPA intranet URL address: http://intranet.epa.gov/ocfo/budget/architecture.htm 5. SITE/PROJECT FIELD: The site/project field is processed by IFMS in an 8-character string as the fifth of six character fields. For those Regions who have exhausted their initial supply of Site IDs, the first position will be "A" followed by one position for the Region (with "0" representing Region 10). For example, A401 represents a new site ID for Region 04 after the initial supply of site IDs has been exhausted. All work performed under the Superfund, LUST, or WCF appropriations will use the SITE/PROJECT field. It is recommended that this field have multiple uses and structures based upon the FUND code used in the transactions. The use of the IFMS Project Cost Accounting System (PCAS) module in conjunction with this field will enable the BFY/FUND field to determine which structure is valid for that FUND code. PCAS offers three layers of structure: • Agency-wide code , which enables the PROJ costs to be gathered regardless of BFY/FUND combinations. • Project, which is the basic level to gather either obligations, expenditure, or cost data. • Sub-project, which allows for a lower level of data structure linked to a specific project. EXAMPLES: a. SUPERFUND: positions will enable the gathering of data by site ID, activity code, and operable unit within the site. All 8 characters must be entered for the edit program to recognize the code as valid. CHARACTER LOCATION/USE (S): 1234 Superfund ID identifying region and the specific site or non-site cost 55 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 5 6 Superfund activity code 7 8 Operable unit within a specific site (If no operable unit, enter 00) b. WORKING CAPITAL FUND: Positions will enable the gathering of fund data and costs by each service level and charge customers of the Fund a standard charge for each of the service levels provided. CHARACTER LOCATION/USE (S): 1_ Indicates whether code is a cost or revenue 2 3 Identifies cost pool 4567 For revenue codes, denotes customer's allowance holder and responsibility center codes Future uses c. INFORMATION TECHNOLOGY CODE: Used to track purchasing related to IT. CHARACTER LOCATION/USE: For all characters except the first, use zero if N/A 1 L for IT 2 3 Specific identifiers for major and significant project and/or system. 4 Life cycle phase of major and significant project. If 2nd and 3rd characters are not zero, then 4th character must be a P, D, or M. 567 Specific IT cost area for security, and regional uses. 8 Future uses For more information on use of IT codes, read the Office of Comptroller policy on the Agency's intranet at: http://intranet.epa.gov/ocfo/policies/policy/pa01.htm d. OTHER USES: Other Offices planning to use this field should contact the Office of Budget (OB). CHARACTER LOCATION/USE (S): 12345678 Local Option Data entered in the SITE/PROJECT field will be verified for validity by the Project Reference table (PROJ) and the Sub-project Reference table (SPRJ) in IFMS. This table is maintained primarily by the Financial Systems Staff, OFM. In each of the regional offices, access will be granted to a Superfund finance person for updating new site names and establishing codes. This field can be a required entry within a particular FUND. 56 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 6. COST/ORG FIELD: The cost/org field is processed by IFMS in a 7-character string as the last of six character fields. All space is available for local option. EXAMPLES: OSWER proposed using this field for a 3-character activity sequence number called "CERCLIS Serial Number." OPPT classifications were moved here from the PROJECT field when the IT classifications were begun. The field was to be used only for extramural work. Data entered in this field is verified in the ORGANIZATION (ORGN) table in IFMS. The ORGN table is maintained by the Financial Systems Staff, OFM. B. APPROPRIATION NUMBER (TREASURY ACCOUNT SYMBOL) Each appropriation account is identified at the U.S. Treasury by a code called a Treasury Account Symbol. These symbols consist of seven or more alpha-numeric characters, for example: 684/50108 EPA FY 2004/2005 EPM acct. 68-20X8153 EPA LUST. Trust Fund acct. 68X0110 EPA B&F account The account symbols provide the following information: Department or Agency Code - the first 2 characters identify the Agency (EPA = 68) responsible for the account and is assigned by the Treasury. [NOTE Agency code 20 signifies a Treasury account and is found in EPA's Trust Fund account codes.] Period of Availability-the next character(s) represent the period of availability of the account for obligation one-year appropriations - a single digit (0 through 9) indicates the fiscal year for which the appropriation is available for obligation (e.g. 4 = FY 2004) As of FY 2004, EPA has no one- year appropriations. multiple-year appropriations - two digits separated by a slash indicate the first and last fiscal year for which the appropriation is available for obligation (e.g. 4/5 = FY 2004/2005) no-year appropriations - an "X" is used to designate an appropriation which is available for an indefinite period of time Fund Group - the last four digits identify the specific account by Treasury fund group (e.g. 0108 = EPM) For a complete list of EPA Treasury Symbols, see Exhibit 2520-3-1. 57 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 C. OBJECT CLASSES 1. OMB Object Classification Codes Federal agency object classification requirements are issued annually by OMB in Circular A-11. Object classes are used for government-wide accounting and reporting of the services or articles the federal government procure. OMB supplies the structure and codes of major object classes codes for which the agencies supply the detail. Examples of OMB major object classes codes are: 10 Payroll 21 Travel 24 Printing and Reproduction 26 Supplies and Materials 31 Equipment 41 Grants All of the OMB major object classes can be viewed in IFMS by accessing the Budget Object Code (BOCT) table and observing the column labeled "MAJ OBJ CIS". 2. EPA Object Classification Codes For purposes of budget planning and execution, EPA does not use all of the OMB major object class codes. In FY 2004, the Agency streamlined the OMB codes into only seven (7) Budget Object Classes (BOCs) eliminating the programmatic/administrative distinction in the Operating Plan. The programmatic/administrative distinction will continue at the sub-object class level. The BOC list is as follows for FY 2004 and subsequent years: (new codes in bold): 10 PC&B 21 Travel 28 Site Travel 36 Expenses 37 Contracts 38 Working Capital Fund 41 Grants By utilizing only seven (7) BOCs, EPA has grouped OMB codes for rent, printing, supplies, transportation, and equipment into BOC 36 (Expenses). This EPA classification structure was adopted to streamline budget processes and reduce workload forthe budget community. All of the Agency's BOC codes (crosswalked to OMB major object classes codes and EPA's Sub-Object Class (SOC) codes can be viewed in IFMS by accessing the BOCT table and observing the column labeled "BUDG BOC". Not all BOCs are valid for all appropriations (e.g. the 32.00 series - Land and Structures is only valid in the B&F account). The purpose of an annual appropriation determines what object classes are permissible in a given fiscal year. 3. EPA Sub-Object Classification Codes For EPA's budget planning and execution purposes, only a certain level of information is needed and the seven (2 digit) budget object class codes (BOCs) are sufficient. For accounting purposes, however, a four (4) financial sub-object class codes (FSOCs) are used. Each of the sub-object class codes rolls up into one 58 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 of the seven (2 digit) budget object classes codes (BOCs). The 4 digit FSOC provide the level of detailed information needed for accounting and reporting spending to OMB, GAO, Congress, etc. All the sub-object class codes and definitions fall within the broader scope of the OMB major object classes codes. For example, EPA has many sub-object class codes/definitions for the OMB Object Class code 26 (Supplies and Materials). Additionally, all financial sub-object class codes crosswalk to one of the seven (7) 2 digit budget object class codes. A display of the OMB, BOC, and financial sub-object class relationships is included as Exhibit 2520-3-2. All of the Agency's financial sub-object class codes (cross walked to OMB's object class codes and EPA's budget object class codes) codes can be viewed in IFMS by accessing the BOCT table and observing the column labeled "OBJECT CLASS". The sub-object class codes and definitions are Part IV of RMDS Chapter 2590 and can be viewed on-line at the following intranet URL address: http://intranet.epa.gov/ocfo/policies/resource.htm 59 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 II. OPERATING PLAN CONTROL AND MANAGEMENT A. ADVICES OF ALLOWANCE 1. Nature of Allowances 31 U.S.C. 1514 provides that Agency allotments will be established at the highest practical level. At EPA, OMB apportions the appropriated funds to the EPA Office of Budget (OB) Director as the Agency's single Allotment Holder. The OB Director retains the original signed apportionment documents on behalf of the Agency. This is the Agency's formal designation regarding "Administrative Subdivisions of Funds". The Agency does not have sub-allotments. The one restriction on the Agency's allotment is that it cannot exceed the amount of the apportionment. Advices of Allowances (AOAs) are management tools for providing funds to Headquarters Program Offices and Regions for meeting Agency operational needs. They are not formal sub-allotments of apportionments or administrative divisions of funds for the purposes of 31 U.S.C. 1514 or 1517. AOAs are issued by the Office of Budget (OB) Allotment Holder (AH) in amounts that, in the aggregate, cannot exceed the amount of the apportionment. The AOAs are provided to EPA managers called Allowance Holders (AHs). This system establishes an organizational framework for funding and permits the appropriate Agency officials to commit and obligate portions of the Agency's Operating Plan. The majority of Allowance Holders are National Program Managers or Regional Administrators who organizationally manage portions of many EPA appropriations. While AOAs are not formal sub-allotments or administrative subdivisions of funds, the Agency has financial management controls in place to ensure that Allowance Holders do not commit or obligate funds in excess of the amount of the AOA. Further, the Allotment Holder (AH) has the responsibility, authority and technical capability to issue, withhold, or withdraw any or all allowances or portions of allowances as appropriate. The Allotment Holder (i.e., the Office of Budget) also has the authority to consolidate allowances centrally (or designate new Allowance Holders), if Allowance Holders are not properly managing the AOAs. 2. Advice of Allowance Issuance AOAs are made available to the respective Allowance Holders through the IFMS at the start of the new fiscal year. This assumes Congress has provided an appropriations act and that an Operating Plan has been entered into IFMS. The Operating Plan, which is the more detailed budget that adds up to an allowance, is found in the Allowance Inquiry Table (ALLT) in IFMS and is at the Program Results Codes/Budget Object Class level. The funds control lockout level at EPA is set in IFMS at the Appropriation/Allowance Holder level. The on- line feature in IFMS which shows this Appropriation/Allowance Holder level is called the Suballocation Inquiry Table (SALC). Allowance Holders will have a SALC table record for each appropriation for which they hold an allowance. This includes carryover and reimbursable allowances. For example, the Allowance Holder who is the Director of the XYZ Program may hold the following four allowances: a. EPM b. LUST c. Superfund d. Superfund Reimbursable The Advices of Allowance is issued at the Appropriation/Allowance Holder level. The Operating Plan, which is the more detailed budget that adds up to an allowance, is found in the Allowance Inquiry Table (ALLT) in IFMS and is at the Program Results Codes/Budget Object Class level. 60 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Some organizations are sufficiently large or geographically spread so that an Allowance Holder subdivides its organization and Operating Plan into smaller units of control called Responsibility Centers (RCs). In IFMS,this lower level of RC detail is found in the Sub-allowance Inquiry Table (SAIN) and is displayed at the Program Results Codes/Budget Object Class level. Allowance Holders and Responsibility Centers may view their respective allowances or Operating Plan at anytime IFMS is operating. Exhibit 2520-3-3 provides a display of the organizational hierarchy of the budget tables in IFMS. EPA submits the Enacted Budget to the Congressional appropriations committees. EPA does not need to wait for any Congressional approval or concurrence of the Enacted Budget. Shortly afterwords, the Office of Budget Director issues an annual Advice of Allowance Letter which formally transmits the following types of information. • Operating Guidance for the Year • Agency Ceilings (if any) • Limitations to the Operating Plan • List of Control Team Analysts • Action Items The Allowance Holders are responsible for staying within the FTE ceilings and fund ceilings reflected in this AOA letter. FCOs must obtain a copy of the Advice of Allowance Letter from their Allowance Holder (AH). To view copies of the current fiscal year's AOA and previous AOA memos see: http://intranet.epa.gov/ocfo/budget/budgetmemos.htm 3. Adhering to Advices of Allowance The Advices of Allowance, represented in IFMS by the SALC tables, specifies how much the Allowance Holder may commit and obligate in the fiscal year. The SALC table updates instantaneously to reflect commitments, obligations, payments, and reprogrammings processed in IFMS. Each federal agency usually does not have the full amount of its appropriation at the beginning of the fiscal year. However, since FY 1995, OMB has apportioned EPA's funds in the first quarter. This has been transmitted using a revised one-page letter format which apportioned all Agency funding. Beginning in FY 2002, both the standard SF-132 Apportionment form and EPA's one-page letter format are transmitted to OMB electronically. IFMS also provides the Office of Budget (OB) with the capability to set funds control at either the total Operating Plan level or for a combination of data elements. A control on a combination of data elements may specify any particular Appropriation, RPIO, Allowance Holder, Responsibility Center, Program Results Code or Budget Object Class. Allowance Holders also have the capability in IFMS to set their own spending controls on sub-AH levels (such as the RC level or lower) without OB approval. B. REPROGRAMMING 1. Definition and Purpose Reprogramming is defined as "shifting of funds within an appropriation or fund account to use for different purpose(s) than those contemplated at the time of the appropriation.". In addition, the House or Senate Appropriation Committee report will include additional information, and/or restrictions on Agency reprograpmmings. A reprogramming shall also consist of any significant departure from the program 61 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 described in the Congressional Justification without a change in funding Reprogramming activity at the start of the fiscal year does not usually begin until EPA has submitted the Enacted Budget to Congress. For EPA that means a reprogramming is any movement of dollars or FTEs in the Operating Plan either at a Responsibility Center or Allowance Holder level including any change into or out of a Program Results Code,or organizations (e.g. AH or RC). As a matter of policy, EPA adheres to reprogramming limitations contained in the Congressional Appropriations Committee Reports accompanying the annual appropriations act. In cases where either the House or Senate Appropriation Committee report displays an allocation of an appropriation below a budget activity level, the more detailed level shall be the basis forthe reprogramming action. Managers use reprogrammings to meet the changing needs and priorities of the Agency. Some examples of reprogramming actions are: 1. Resource changes between program results codes or program areas 2. Resource changes between organizations (e.g. AHs, RCs) 3. General resource reductions or increases. IFMS is set up to monitor any resource ceilings and floors. However, this capability is based on the Operating Plan and not spending. Therefore, all organizations are responsible for monitoring their obligations against the Operating Plan and reprogramming when needed in advance of commitment and obligation. Failure to adhere to this policy could result in a lower level of organizational lockout and/or withdrawal of Allowances by the Agency Allotment Holder (Office of Budget). 2. General Reprogramming Restrictions Congressional Restrictions As stated above, EPA generally follows Congressional restrictions on reprogramming funds with an Enacted Budget. The terms of the Congressional committee restrictions may change with each appropriation. For example, the Agency has historically received direction to obtain approval from the appropriation committees prior to each reprogramming that exceeds the amount specified in the conference committee reports out of program areas, or areas of Congressional interests, or results in an increase or decrease of 10% annually in affected programs. Congressional committee language has historically provided an exception to the reprogramming limitation for the State and Tribal Assistance Grants account relating to: 1) request to move funds between wastewater and drinking water objectives for grants targeted to specific communities; and 2) reprogramming of performance partnership grant funds, which are exempt from this limitation. BAS Pre-Approval of Reprogrammings As a result of reprogramming requirements initiated in FY 2006, and the inability of IFMS to appropriately prevent potential Congressional reprogramming changes, the Office of Budget established a reprogramming pre-approval process with the Budget Automation System (BAS). For all net movement of funds across program/projects or subprogram/projects for appropriated funds, RPIOs must request approval of this movement via a BAS Reprogramming document, before they can move funds in IFMS via reprogramming request. On a quarterly basis, OB reviews the reprogramming requests and evaluates them for potential approval. OB will approve reprogrammings under Congressional limits. Proposed reprogrammings that 62 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 require Congressional involvement will be evaluated to determine the appropriate action. All reprogrammings that do not cross program/projects, can be entered directly into IFMS. Additionally, EPA has agreed to notify the Congressional Committees of reorganization of offices, programs or activities prior to the planned implementation of such reorganizations. The Office of Budget (OB) will assist (RPIOs) in providing Congressional notification for reprogrammings in excess of the Congressional limitation, whenever it is needed. If you anticipate the need to reprogram funds in excess of the Congressional limitation, please notify the Formulation, Control and Policy Staff in the Office of Budget. They will provide guidance on current procedures such as format, content and timing. However, the proposed reprogramming should not be entered into IFMS until the Agency has a response from the Committees and you are notified by the Formulation, Control and Policy Staff. The Office of Budget (OB) also will monitor and enforce compliance with both the letter and spirit of these Congressional limitations to ensure that the Agency's arrangements and relationships with the appropriations committees are not jeopardized. RPIOs will not be permitted to compromise the Congressional limitations by: • splitting reprogrammings (for the same general purpose) into more than one document to circumvent the limitation, • reprogramming incremental amounts (for the same general purpose) into or out of more than one organization (such as ten regions) where the cumulative amount moving between Program/Projects is in excess of the limitation, • reprogramming or spending any amount of Congressional add-on/earmarked funding for a purpose other than that stipulated by the Congress in law, (add-on plus base in instances where Congress has increased an underfunded program), • overobligating a program/project in excess of a Congressional limitation and circumventing the reprogramming process (de facto reprogramming), • reprogramming between activities within a PRC goal/objective that does not move Operating Plan resources but represents a major policy shift. Information regarding the current restrictions and limitations can be found in the annual Advice of Allowance Letter. Resources may only be reprogrammed within a single appropriation (or Fund, in IFMS). Movement between appropriations requires an "appropriation transfer" (or balance transfer) authority which Congress has to enact in law. Funds must also be available (uncommitted, unobligated, and unexpended) in order to be reprogrammed. This can be verified by first viewing the Operating Plan (the Allowance Table (ALLT) in IFMS). When OMB apportions funds to EPA by quarter, reprogrammings may only move funds from one quarter to another if offsetting funds are moving the other way on the same document. 63 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 3. Reprogramming Limitations (Ceilings and Floors) Any Agency ceilings and floors, which may be imposed on EPA appropriations for a given year, are transmitted by the Office of Budget (OB) to the Agency in a number of ways including: direct communication; the annual Advice of Allowance letter; and the appropriation analysis binder that is sent to each Assistant Administrator/Regional Administrator. a. Ceilings - Certain Agency resources are designated by Congress or OMB with a cap or limitation referred to as a "ceiling". Ceilings are not resources. Ceilings impose planning and spending limitations for resources that cannot be exceeded. In a number of our appropriations, one or more ceilings may be imposed upon EPA for: Full-Time-Equivalent Work years (FTEs), site-specific & non site-specific Travel, Administrative Expenses, and sometimes even specific programs. In addition, the Agency may violate the Antideficiency Act if its obligations and disbursements exceed specified statutory ceilings in an appropriations act. The OIG appropriation account does not have ceilings. EPA establishes and maintains agency limitations for the following non-statutory ceilings: Workyear Ceilings - Workyears are also known as FTE (full-time equivalents). A full-time equivalent (FTE) is the total number of hours (worked or to be worked) divided by the number of compensable hours applicable to each fiscal year. A work year is equal to between 2080 - 2096 employee work hours per year (listed by year in OMB Circular A-11) depending on annual calendar fluctuations (i.e. a leap year). All employees, including Agency Co-ops and stay-in-school employees count against the Agency work year ceilings. These ceilings apply to workforce appropriations such as: Environmental Programs & Management (EPM), Science & Technology (S&T), Superfund (to include funds deposited in Superfund Special Accounts), and Leaking Underground Storage Tanks (LUST). Workyear levels are developed during the budget planning process and are determined by anticipated Personnel, Compensation, and Benefit dollars divided by cost-per FTE estimates. Work year ceilings are imposed by the Agency to restrain the obligation of PC&B resources and to control the size of the Agency's workforce. FTE ceilings are no longer imposed by OMB and are also not mandated by Congress. However, Congress may put language within the Act, or legislative history to the Act, that has explicit FTE implications. At times, FTE "caps" to certain EPA Offices have also been included as Administrative Provisions in our Act. Within the Agency, FTE ceilings in workforce appropriations are issued to the appropriate RPIOs/Regions including ceilings on reimbursable work years. Each RPIO is responsible for monitoring and managing their FTEs. RPIOs are also expected to manage FTEs consistent with existing budgets and should implement hiring plans such that end of year on-board staff levels leave the Agency with flexibility to deal with reasonable budget changes in the next fiscal year. Work year ceilings (including Reimbursable FTEs) are issued annually and do not carry over from one year to the next. All other multi-year and no-year ceilings do carry over in conjunction with the dollar balances. Neither carryover ceilings nor dollars are part of an Allowance Holder's budget until the Office of Budget (OB) has made them accessible in the IFMS Operating Plan. The Agency cannot carry over more ceiling than it has carryover dollars, and neither can any RPIO/Region. Travel Ceilings - These administrative ceilings apply to limitations on travel appropriations such as: EPM, S&T, SF, and LUST to prevent abuse of total travel amounts for the Agency. Individual RPIO travel ceilings are listed in the Annual Advice of Allowance Memorandum. They are based on travel budget estimates in EPA's Budget Request to Congress and are subject to change by the Congressional committees. 64 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Administrative Expenses Ceilings - These ceilings have been imposed in the past to limit administrative expense costs. In some cases, the ceilings were specified in the Appropriations Act with specific dollar amounts. Even though our appropriations act does not currently contain specific administrative expense ceilings, the Agency has agreed with the Committees that prudent management will be observed. As a result, EPA continues to maintain the administrative/ programmatic charging distinctions and to carefully monitor spending. Programmatic Ceilings This type of ceiling represents a limit placed on a particular Goal, Objective, Program/Project, Agency Activity, etc. (e.g. Criminal Enforcement Training), (e.g. the new Brownfields law contains a ceiling on expenditures for Brownfields research, training, and technical assistance carried out under CERCLA 104(k)(6). It's 15% of the amount appropriated to carry out CERCLA 104(k)). To ensure that the Agency is in compliance with jts ceilings, EPA organizations are provided with ceilings of their own (sub-ceilings). An organization, for ceiling purposes, may be defined as any level within EPA including RPIOs, Regions, Allowance Holders, or even RCs. All organizations must live within each of the ceilings imposed and must take affirmative measures in advance to ensure that ceilings are not exceeded at anytime. b. Floors - Congress or OMB; though the apportionment process, may mandate minimum amounts that must be dedicated for specific purposes (e.g. add-ons), programs, budget object classes, projects, etc. These resource amounts that the Agency must, at a minimum, dedicate for the activities indicated, are called "resource floors". Resources to meet floor levels, if any, cannot be planned, reprogrammed, committed, obligated, or disbursed for any purpose other than that intended by Congress or OMB. A major object class such as Personnel, Compensation and Benefits (PC&B), a particular activity within a program, a whole program, are all candidates for floor designation. Programmatic Floors - Floors are sometimes created by using earmarked totals or restrictive language which specify the exact amounts to be budgeted (including reprogrammings) or obligated for a specific program (e.g., formula-driven grant programs), group of programs or a specific activity within a program (e.g., Compliance Assistance Program at $25 M in FY2000). Congress does this to "lock in" a specific amount of funding for a particular purpose that prevents deviation from the amount of funding that it deems necessary. To ensure that the Agency is in compliance with jts floors, if any, EPA organizations are provided with floors of their own (sub-floors). An organization, for floor purposes, may be defined as any level within EPA including RPIOs, Regions, Allowance Holders, or even RCs. All organizations must comply with each of the floors affecting their operation and must take affirmative measures in advance to ensure that floors are not violated at any time. In multi-year appropriations, all floors carry over from one year to the next in conjunction with any associated dollar balances being reissued. Agency limitations such as ceilings and floors are established in the IFMS Limits Reference Table (LIMT). An error message will occur if reprogramming transactions violate any of the limitations in this "net" through which all IFMS reprogramming transactions are screened. 4. IFMS Reprogramming The AH/SBO/Regional Budget Officer initiates a reprogramming document as a result of any planned change, either programmatic or budgetary, to the current year Operating Plan in IFMS. They are responsible 65 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 for editing and correcting the reprogramming document and indicating their approval (level 1) in IFMS. These reprogrammings appear on the Suspense File (SUSF) in IFMS. The Control Team of the Formulation, Control and Policy Staff accesses all reprogramming documents that appear on the SUSF in IFMS where 1st level approval has been applied on the prior day. The Control Team reviews the reprogrammings and, if necessary, routes the reprogramming document to the appropriate Office of Budget (OB) Staff for review and approval (there may be instances where more than one Staff reviews the document). The Office of Budget (OB) Staffs review reprogrammings which affect the programmatic and policy concerns of the programs. A well written, informative purpose statement (justification) is necessary for approval of the reprogramming document. Reprogramming justifications provide the permanent audit trail of EPA's resources and protection forthe initiatorwhose rationale is documented. Reprogramming justifications should simply state: 1.) what the action achieves for the program(s) oroffice(s) receiving an increase and, 2.) what the impact is to the program(s) or office(s) losing resources. See Exhibit 2520-3-4 for more on how to write a reprogramming justification. Once all steps are completed, the reprogramming document is approved and updated in IFMS. Approval of the document can be viewed by the initiator on the SUSF and is reflected as "ACCPT" in the Status column. The ZRRP table in IFMS displays all recently reprogrammings processed and approved within the last 10 days that reprogram funds between RPIOs. C. CARRYOVER of UNOBLIGATED BALANCES Carryover funds are defined as unobligated balances of appropriation accounts which have not expired at the end of the fiscal year. Because OMB Apportionments expire every September 30th, these carryover balances must be reapportioned to the Agency by OMB in the new fiscal year. Annually, the Office of Budget (OB) estimates carryover balances that will be unobligated at year-end and submits carryover apportionment requests to OMB by August 21 in accordance with OMB Circular A-11 requirements. This helps to ensure that authority has been granted by OMB to have carryover funding available to the Agency at the start of the new fiscal year. However, because this authority is based on amounts estimated almost two months prior to EPA closing its books for year-end, the Agency must be prudent in the use of these estimated carryover amounts until final totals are available and estimated apportionments are revised to reflect actual balances. Two-Year Funds The Integrated Financial Management System (IFMS) is coded so that two-year funds remain available into the second fiscal year and, therefore, carry over automatically. Utilizing this feature, allowances are automatically available when IFMS opens for processing. Although this enhancement provides a number of benefits to Allowance Holders, it also adds responsibilities for managing these two- year funds. For example, while Allowance Holders are not required to request recertification of second-year recovered funds. AH's will have to anticipate and cover any overruns that might occur since overruns will also impact the original accounting data as they are posted in the second year. No-Year Funds As a matter of Agency policy no-year appropriated funds do not automatically carryoverto AHs. The Office of Budget (OB) issues annual guidance (usually during September) which describes the carryover review process and the standard operating procedures for requesting carryover balances of no- year funds for the new fiscal year. Carryover funds are then released as quickly as possible, usually in stages beginning at the start of the new fiscal year and continuing throughout the year. Their release is dependent upon final closeout data and policy decisions by Agency management. 66 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Work years and reimbursable dollars automatically carry over in 2-year unexpired carryover appropriations; No-Year appropriations do not carry over and must be newly issued each year. Travel ceilings do carry over provided that dollars have also carried over. The precedent for unused ceiling carrying forward was negotiated with the Congressional Appropriations Committees and OMB in FY 1986 when the Superfund program had to be operated using carryover funds while waiting for reauthorization. This practice is not limited to the Superfund appropriation. Unused ceilings that are covered by unobligated carryover dollars are also available for reissuance in all other two-year and no-year appropriation accounts. Annual reprogramming restrictions, which are issued shortly after the Agency has an Enacted Budget in the Advice of Allowance Letter, also apply to all carryover funds. EPA has authority to reissue or reprogram carryover balances for new priorities, up to Congressionally specified levels, without Congressional notification provided the resources are not otherwise earmarked. However, resources which carry over as unobligated balances retain any Congressional restrictions as to purpose, time, and amount that applied when they were originally appropriated. D. REIMBURSABLE ALLOWANCES Reimbursable authority is additional budgetary authority authorized by congressional statute and apportioned to EPA by OMB. This additional authority is requested by the Agency and permits EPA to obligate collections and other funding sources (both federal and non-federal) which are in addition to EPA's annual appropriations. The authority is established using an Apportionment and Reapportionment request (OMB Standard Form SF-132). Federal agencies frequently enter into both federal and non-federal agreements where they are either the disbursing Agency or the receiving Agency. Disbursement agreements are made by EPA Offices by obligating their regular allowances from the Agency's enacted appropriations. At EPA, reimbursable allowances are only issued if EPA is the receiving Agency. Some of the instances for which EPA has utilized the reimbursable allowance mechanism in the past are listed below. 1. Reimbursable Interaqency Agreements (lAGs) -This is byfarthe most common reimbursable situation. Under this arrangement, other Federal agencies provide funding to EPA for services which we provide directly or for which we utilize one of our contractors. The authority cited for such agreements is frequently: a.) "cooperation" authority for lAGs [ these sections are found in EPA authorizing legislation (e.g. CERCLA, RCRA, CAA, CWA, etc.), b.) the Clinger-Cohen Act (CCA), also known as the Information Technology Management Reform Act (ITMRA) (e.g. GSA lAGs), and c.) the Economy Act. The agreements themselves are overseen and processed by the Grants Offices throughout EPA. OAM approves a determination and finding relating to Economy Act lAGs that involve contracts. Once the agreement is forwarded to and recorded by the Cincinnati Financial Management Office, this office handles the billing (e.g. if on an actual reimbursable basis, the other Federal agency will be billed as work is completed and/or as the contractor submits bills for payment to EPA. To avoid violations of the Anti-deficiency Act by making disbursements in excess of the appropriation cash balance, close monitoring of the available cash balance forthe effected appropriation should be exercised. For lAGs ~ where EPA is receiving funds from another agency (also known as a funds-in IAG) to provide a certain good or service ~ EPA must first ensure that the funds were received from the other agency first prior to creating an over obligation-where the other agency might fall behind in making payments to EPA. If the cash balance falls below $500,000, further obligations from the appropriation should be shut down until reimbursements or an advance is received from the paying agency to replenish the cash in the appropriation. 2. Intergovernmental Agreements (IGAs) - (Agreements with Other Governments) 67 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 a. State or Local Governments - are provided for under the Intergovernmental Cooperation Act of 1968. In this arrangement EPA provides specialized services being purchased by state or local governments. b. Foreign Governments & International Organizations - are provided for by specific legislation such as section 607 of the Foreign Assistance Act (22 U.S.C. 2357), which allows EPA to receive funds from foreign governments and certain international organizations in exchange for services. 3. Fees -This includes activities such as state and local operating permit and fee programs to enhance the effectiveness of programs for reducing pollutants. Only if authorized by statute, can collections that are received by the Agency be obligated by EPA during that fiscal year. Otherwise, the fees must be deposited as Miscellaneous receipts to Treasury as required by 31 U.S.C. 3302 (b), or as directed in a statute. 4. Special Accounts / Cashouts - This is funding that EPA receives from APotentially Responsible Parties@ through agreements or legal settlements in the Superfund program. The funding is intended to pay for future work at specific sites and EPA is authorized to A retain and use@ these funds by section 122(b)(3) of CERCLA. It should be noted that funds collected in these accounts that are used for performing reimbursable work count against the Agency's FTE/work-year ceilings. 5. Federal Technology Transfer Act (FTTA) - This is authority for Cooperative Research and Development Agreement (CRADA) income and royalty payments from licensing agreements with private firms which will pay royalties to the Federal Government for an exclusive license to use Federally-developed technology. FTTA CRADA funds are held in trust for the co-operators and may be used solely for specified purposes. CRADA funds are subject to recertification and the same internal controls as appropriated funds. FTTA royalty funds lapse at the end of the fiscal year following the one during which they were received. 6. Advance State Match/State Cost Share - This is the percentage of site response costs matched by the individual states either after-the-fact, or under rare circumstances, in advance in the Superfund program. 7. Reimbursable Workyears (FTEs) - Additional workyears to undertake the terms of an agreement can only be provided by OMB and FTEs should not be written into any agreement during budget execution. In the past, in the rare instances where OMB has agreed that reimbursable FTEs were appropriate and justifiable, the FTE were granted during the budget planning cycles (either the OMB submission or the Operating Plan development stage). 8. FIFRAIPAs- Intergovernmental Personnel Act employees under the Federal Insecticide, Fungicide and Rodenticide Act of 1972. 9. Recycling Fees - Collections from the Agency's recycling program. Not all instances for which EPA uses the reimbursable allowance mechanism are situations of actual reimbursement. Many are up-front collections (such as fee programs, intergovernmental agreements, and cash outs) where the agency has statutory authority to retain and use funds, and it is the best mechanism for OMB to provide the obligational authority to the Agency. In all cases, however, where other organizations are providing funding, there is a net zero impact (the result is neither an increase nor decrease) upon EPA's Enacted Appropriations following disbursement and/or reimbursement. Also, the reimbursable apportionment authority is not a budgetary resource until an agreement is entered into (if an IAG) or funds are received (If a collection) and the apportionment authority is thereby funded. 68 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Reimbursable authority must be obtained from the Office of Budget (OB) in the form of a reimbursable Advice of Allowance prior to commitment or obligation of any of the resources described above. However, before authority can be issued, the OB must have received documentation that an IAG has been executed or that funds have been collected by the Agency. For example, an EPA office that has entered into an IAG cannot act upon the agreement until they have forwarded an official executed copy to the OB and received a reimbursable allowance to commit and obligate against. Reimbursable Advices of Allowance are issued through the Integrated Financial Management System (IFMS) and are reflected in the Operating Plan as reimbursable appropriations. Those appropriation accounts for which EPA receives Reimbursable Authority from OMB are: EPM, S&T, LUST, Superfund, OIG, and Oil Spills. Since reimbursable agreements may involve any of the budget object classes, authority will be issued in the appropriation for which the object class and/or work being performed is appropriate. Because there is a net zero impact upon EPA's enacted appropriations, ceilings and floors, if any, do not apply except in the case of Reimbursable work years (FTE). Reimbursable work years (FTE) which accrue as a result of charging PC&B against a reimbursable agreement are subject to an RPIO's own direct FTE ceiling. In other words, an RPIO cannot exceed its work year ceiling (direct plus reimbursable FTE). Not all unfunded Agency reimbursable authority and not all unobligated reimbursable allowances expire at year-end. If the reimbursing Agency's funding has not expired at year end, RPIOs can request a reimbursable allowance in the new fiscal year to cover any unobligated portion of their agreement(s). For more on reimbursable interagency agreements and the reimbursable process, see Chapter 4 of RMDS 2550C entitled: Interagency Agreements. 69 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 III. COMMITTING AND OBLIGATING APPROPRIATED FUNDS A Funds Control Officer's signature on a document signifies that the document has been personally reviewed for accuracy, that all accounting data is accurate and complete, that the transaction has been accepted in IFMS, and that the funds are available as to purpose, time, and amount. There may be rare exceptions when a transaction may not accepted into IFMS. These rare exceptions happen before IFMS is opened at the beginning of a fiscal year. It is the FCO's responsibility to ensure that all of these actions have taken place before forwarding the document to other Agency officials. These officials will be reiving on the FCOs signature to indicate that the funds will not be altered, revised, or withdrawn prior to obligation without advance notice, or until the recipient of the document is notified in writing. This section will cover the essential items on funding documents that an FCO should review, and common funding problems an FCO may encounter after committing the funds and how those problems are resolved. Since an FCO's realm of responsibility may vary between depending on whether they are located in HQor the Regions, not all of these functions may actually be performed by the FCO. However, in either location, the FCO is directly responsible for, or subject to, coordinating with other personnel on the following activities. A. REVIEWING AND APPROVING FUNDING DOCUMENTS A lack of attention to detail in properly reviewing a funding document could result in a violation of the Anti- Deficiency Act. Therefore, the FCO should ensure that the following information is correctly cited on the document before committing the funds in IFMS: 1. Correct Appropriation: Chapter 1 Part III describes the different appropriations used by the Agency and their purpose. The FCO must ensure that the funds cited are being used for the appropriate purpose. The FCO may also need to apply the "Pick and Stick" rule to determine whether or not the document is funding something from one appropriation that traditionally may have been funded from a different appropriation. This rule was covered in Chapter 1 (Part II, A 1). 2. Correct Account Number: See Chapter 3, Part I for description of the 6-Field IFMS Account Code and how to enter this information. 3. Correct Object Class Code: See Chapter 3, Part I for description. FCOs must ensure that the document cites the correct sub-object class code in terms of properly categorizing the item, coinciding with the appropriation cited and properly identifying the item as being administrative or programmatic in nature. For further information, FCOs should review RMDS 2590 which contains a description of all of the Agency's sub-object class codes. 4. Correct SFO Code: Chapter 2, Part II describes the roles and responsibilities of an SFO. The SFO closes out commitments and enters obligations into IFMS. Thus, all funding documents must cite the proper SFO code in order to reach their proper destination and be processed. The correct SFO code is based upon the FCO's geographic location and/or on the type of funding document being processed. See Exhibit 2520-2-3 forthe correct SFO code to use for each type of funding document. 5. Accurate Mathematics: FCOs must ensure that, when more than one quantity of an item is being procured, the total cost of the purchase is correct. Thus, the estimated unit price multiplied by the quantity must equal the total price/cost shown on the document. If the funding document is citing more than one appropriation and one of them is a Trust Fund appropriation, the FCO must make sure that the Trust Fund layoff percentages used in calculating the 70 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 costs against each appropriation are correct, and that the document cites the appropriate corresponding accounting information. For more information on the concept of Trust Fund Layoffs, see Chapter 4(G). 6. Correct Signatures: FCOs must ensure that the document has all the proper signatures (Initiator and/or Approving Official). Actions sometimes require different levels of approval, such as international travel which requires higher level approvals than domestic travel. Based on the amount of an item being procured, Bankcard purchases might need a Contracting Officer's (who has a warrant) signature. FCOs should be familiarwith all persons authorized to sign fortheirorganization. By checking for signatures, the FCO is assured that the document has been reviewed by the appropriate individuals. (If multiple organizations are involved, all appropriate FCOs are responsible.) Also, OAM requires that some types of procurement have signatures from individuals outside of the FCO's office. For example, for the purchase of any Information Technology (IT) equipment, the funding document must have the SIRMO's (Senior Information Resource Management Official) signature. For the procurement of furniture or renting of conference space, the document must have a signature from the Facilities Management & Services Division (FMSD). 7. Proper Funding Vehicle: Most commonly used funding documents at EPA are fairly self-explanatory (i.e. Travel Authorization and Travel Voucher for travel related expenses). However, there are some instances where the FCO needs to apply policy guidance. Although the document may originate with the Contracting Officer Representative (COR), the FCO must also know when it is appropriate to use a contract but not a grant or cooperative agreement. The Federal Grant & Cooperative Agreement Act (FGCAA), 31 U.S.C. 6301 et. seq., provides that grant and cooperative agreements must be awarded when the principal purpose is to carry out a public purpose of support or stimulation authorized by statute, rather than to acquire services or products which directly benefit the government. In interpreting the FGCAA, EPA Order 5700.1, states: If an office or laboratory's principal purpose, in undertaking a project, is to obtain a product or service for the direct benefit or use of the Agency, or any part of the Federal government including the legislative and judicial branches, a contract, rather than a grant (assistance agreement), must be used. There is one exception. It is when services - for the direct benefit or use of the Agency - are related to the Senior Environmental Employee (SEE) Program, which is authorized by the Environmental Programs Assistance Act. In this case it is more appropriate for this program that was established by Congressional legislation and is awarded through SEE grants. B. RECORDING COMMITMENTS Once the document has been properly reviewed, and all financial data is correct, the funds are ready to be committed. Committing funds reserves a specified amount for a specific purpose. Commitments help managers to estimate how much individual spending actions will cost and to predict overall expenditures based on actions that are not yet obligations. Since large procurements often take months to award, it is essential that FCOs ensure that committed funds remain available throughout the entire procurement process. 1. Funds Availability Check The first thing an FCO must do after reviewing the document is a funds availability check. A document cannot be committed if sufficient funds are not available. If allowances have been established at the RC level, the two key tables to observe in IFMSarethe SASPand SAIN Tables. For those Allowance Holders 71 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 whose funds are not distributed to a lower level, funds availability can be confirmed in the ALLT or ALST Tables. If funds are available, then the document can be committed. However, if there are insufficient funds, the commitment may not be processed and it may be necessary to submit a reprogramming request. Although IFMSwill not lock out such a spending action unless the AH total is insufficient at the appropriation level, spending another RC's resources within the same Allowance violates Agency policy. If the Operating Plan has not been established at the RC level, an office must have alternate procedures in place to determine RC balances. See Section II of this chapter for more information on reprogrammings. The FCO initiates the reprogramming request based on their own organizational level. For example, an FCO at the RC level would contact the AH. An FCO at the AH level would contact the SBO. Remember, the type of reprogramming required (RR or RP) will determine the level of approvals needed. If there are insufficient funds and a reprogramming cannot be accomplished, then the spending action cannot be undertaken. 2. Entering Documents into IFMS and Travel Manager If funds are available, the FCO enters the funding document into IFMS as a Requisition (RQ) or into Travel Manager as a Travel Order (TO). While the RQ is entered as a commitment, TOs are entered as an obligation. The FCO (or IFMS) will assign the document a Document Control Number (DCN). The DCN is then written on the funding document. A DCN should never be written on a funding document without having been entered into IFMS first. The number on the document and in IFMS must match. Putting the "next in line DCN" on a document without actually committing the funds into IFMS is poor fiscal management. It is essential that data on funding documents be accurate, legible and consistent with what is entered into IFMS. If any changes are made to the funding document after it has been sent forward, the FCO must immediately notify the obligating official of the changes. It is critical that the FCO maintain organized and accurate records of all the funding documents processed throughout the fiscal year. According to EPA's Record Management Manual, all funding documents and records related to IFMS should be held for up to 3 years after they are filed and final payment has been made, then retired to the Federal Records Center. After the document has been entered into IFMS and the funds are committed, the FCO may choose to transmit the document or return it to the originator for transmittal to the obligating official, according to local office procedures. Obligating officials are EPA employees who have been delegated authority to legally obligate the government to pay for goods and services. Obligating officials, including Contracting and Grants Officers, know how to process an obligation, and what constitutes evidence of the obligation. Obligating officials forward a copy of the obligating documents to the SFO to officially record the obligation of funds in IFMS. Obligating officials will also forward copies of the obligating document to the originator and/or to the FCO. The copies may be marked "Receiving Report" and "Originator". If the originator is someone otherthan the FCO, internal procedures should be established to ensure that the originator forwards a copy to the FCO. This is especially true with Training Requests, which are obligated as Purchase Orders on the same form and usually returned to the trainee for submission to the vendor. It is important that the FCO maintain a copy of all obligating documents in their files to facilitate any reconciliation that may be necessary. 3. Unfunded Procurement Requests (PRs) for Planning Purposes Many Federal Agencies use Planning Purpose PRs (PPPRs) in their procurement process. Traditionally, these types of PRs are non-funded actions that are used in initiating procurement efforts that will take a long time to award, as well as for procurement actions that must begin on, or soon after, the start of the next fiscal year (i.e., contracts for service-related contracts that an Agency uses every fiscal year). Currently, in OAM, the Procurement Initiation Notice (PIN) has replaced the planning PR (PPPR) for new procurements using other than simplified acquisition procedures. Exercising options, renewing leases, 72 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 maintenance agreements and other requirements submitted subject to the availability of funds are initiated by the Project Officer (PO) using a PPPR. In order to start the procurement process in a timely manner, a PPPR is necessary to help the procurement office determine how much money the Agency needs for a given good or service, and using that estimate as a base during the negotiating process with a contractor. Once a contract is negotiated in terms of cost, a Contracting Officer (CO) will then request a revised PR (from those offices that submitted PPPRs) that reflects the negotiated amount priorto obligating the contract. When planning PRs are done for a service that will be required in a new fiscal year, federal procurement regulations require that the PR contain the following statement: "This PR is for planning purposes only. does not constitute a contract or a commitment to a contract, does not constitute a contract or a commitment to a contract, and is subject to the availability of funds at the time of award." This statement is placed on PRs to ensure compliance with the Antideficiency Act (no funds may be obligated on any government contract in advance of an appropriation) and the bona fide needs rule (an appropriation may only be obligated to meet a legitimate need that exists during the period of availability). See Chapter 1 for further information. A good example of when the Agency uses planning PRs is with maintenance contracts. Maintenance is a service that is continually required every fiscal year. To negotiate a price with a contractor for maintenance, the Office of Acquisition Management (OAM) first determines how many program offices within the Agency will need the service. OAM will send out an annual call letter (during the summer months) requesting that those offices needing maintenance service send them a planning PR containing a cost estimate (based on previous years) for how much the office expects to pay for their maintenance costs. These planning PRs are then used by OAM as a base when negotiating with a contractor for the actual cost of the contract. Offices that fail to provide a planning PR (or a revised PR after the contract costs have been negotiated) to OAM for a service or good, and then actually receive a service or good from a contractor may create an unauthorized procurement. See Section I for more on unauthorized procurements. For more information on Planning PRs, see section 7.3.5.1, paragraphs C and E of the Contracts Management Manual at: http://epawww.epa.qov/oamintra/policy/cmm.pdf C. MONITORING FUNDS after COMMITMENT It is important that the FCO monitor open commitments to ensure that the obligations are promptly and properly recorded in the IFMS. There are at least two methods for FCOs to monitor the status of commitments and obligations in IFMS: through IFMS on-line tables or through report printouts. When a funding document has been obligated, it is usually assigned an Obligating Document Number (ODN), which will be used by the SFO to record the transaction in IFMS. Your receipt of a copy of the obligating document should alert you that the obligation transaction should soon appear in IFMS. By looking forthe ODN in IFMS tables or on reports, FCOs can determine if the obligation has been properly recorded. 1. IFMS Tables There are three tables in IFMS an FCO can use to see if a commitment document has been obligated: a. The Document Cross-Reference Inquiry Table (DXRF) table is particularly helpful in determining whether a commitment has been obligated. The FCO can use this table by scanning on the RQ Document ID. The table displays the Obligating Document Number (ODN), the date obligated, and the amount. Also, the ODN will appear in IFMS in the form of a Contractual Obligation (CO), 73 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Grant Obligation (GO), or a Miscellaneous Obligation (MO). The view displayed on DXRF will not provide the current status of the obligation but the Orders Header Inquiry Table (OBLH) / Purchase Order Accounting Line Inquiry Table (OBLL) will. b. The OBLH and OBLL tables display the current status of obligation transactions, including the total obligated amount, the total expended amount, the closed amount and any outstanding, or open, obligation amount. The OBLL table shows status byline; not forthe total obligation. Users simply need to scan on the Obligating Document Number (ODN) that was identified in DXRF. The expended amount is the amount of the obligation that has been paid. The closed amount reflects the amount of the obligation that is no longer available for payments. The outstanding amount identifies how much of the obligation is still open or unpaid. 2. Financial Data Warehouse (FDW) Reports FCOs, in monitoring their funds in IFMS, will need to use EPA's Financial Data Warehouse (FDW) or IFMS tables. EPA developed the FDW to consolidate financial data from various enterprise systems into a single relational database that provides user-friendly access through the use of standard queries or an ad hoc software query package. The FDW is a collection of data from the following enterprise financial information systems: 1. Integrated Financial Management System (IFMS) IFMS is the core financial management system supporting budget execution and accounting functions. IFMS supports the standard general ledger, is the source of data for preparing financial statements and budgetary reports and supports program officers in the management and control of funds. Transaction level financial data is copied to the FDW. 2. EPA's Payroll System (PeoplePlus) PeoplePlus is EPA's new payroll system that supports the time and attendance functions. Payroll information by employee is copied to the FDW on a bi-weekly basis. Summarized information at the account level is interfaced on a bi-weekly basis to IFMS. 3. Combined Payroll Redistribution and Reporting System (CPARS) (PeoplePlus module version) CPARS supports the adjustment or correction of payroll costs among accounts after employee compensation is made. Adjustments to payroll information by employee are copied to the FDW. 4. Contract Payment System (CPS) CPS is used to process all payments for all EPA contracts. Invoice, obligation and vendor data is copied nightly into the FDW. 5. Integrated Grants Management System (IGMS) IGMS is used to manage all EPA grants. Award, disbursement, and grantee data is copied nightly into the FDW. IGMS, however, does not track the individual disbursements or payments of the grants, and users must use IFMS or FDW to obtain that information. All of the data that resides in the FDW originates from a separate official system. The copy of the official data that resides in the FDW is never changed. User access to the data is read-only. Access to sensitive data, such as that related to employee pay and awards, requires special access. 74 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 The data that is stored in the Financial Data Warehouse is available to EPA users in two options. 1. the user may utilize the EPA's Financial Data Warehouse via the EPA Intranet, or 2. the user may use direct access by using Lotus Approach, Impromptu, MS Access, and other tools. The EPA's Financial Data Warehouse Web Queries are available via a link from EPA's Intranet home page and consists of a list of reports from the various financial systems. The user will click on the report of their choice and enter the appropriate selection criteria to retrieve the data they requested. The FDW home page can be accessed at the following EPA intranet address: http://intranet.epa.gov/fdw/ Direct access to the FDW Direct access to the FDW Oracle database is available. Users will need to provide their own reporting tool and must have an Oracle client set up on their PC. Some reporting tools that are being used and known to work include Lotus, Approach, Cognos Impromptu, Business Objects, Microsoft Access, plus the various Oracle reporting products. Any reporting tool capable of connecting to an Oracle database or an ODBC data source should work. 3. Orbit Reports In FY 2004, OCFO launched ORBIT (OCFO's Reporting and Business Intelligence Tool). Although some EPA offices have already been using Business Objects, the software that ORBIT is built on, for a range of financial operations for the past year, the launch of the customized and centrally-managed ORBIT tool represents a significant milestone in OCFO's efforts to bring financial information to day-to-day decision making across the Agency. The phased deployment of ORBIT will begin with an executive dashboard, a group of standard reports, and an ad hoc reporting tool for advanced users. Future development of ORBIT will focus on meeting financial reporting needs not addressed in Phase I in addition to addressing new report requirements including the introduction of programmatic and performance information to the reporting structure. Additionally, plans for ORBIT include reporting against additional data sources not represented in the Financial Data Warehouse. ORBIT will support a wide range of management, analysis and operation activities across the Agency. The goal of ORBIT is to improve the Agency's financial reporting capabilities, and significantly expand the ability to integrate financial, administrative, and program performance information providing managers and executives the tools necessary to make informed decisions about their programs. D. RECORDING OBLIGATIONS As mentioned earlier in Chapter 2, Obligating Officials are those individuals who have the legal authority to enter the Agency into contractual or other agreements that obligate Agency funds. An obligation can be described as a legal liability of the government to pay for those goods and services ordered or received. GAO's Principles of Federal Appropriations Law (also known as the Red Book) Chapter?, "Obligation of Appropriations", lists the five elements that must be present in all agreements (or contracts) in order for an obligation to take place. The agreement must: • be legally binding; • in writing; • for a purpose authorized by law; • executed before the expiration of the period of obligational availability (before the funds 75 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 expire), and; • must call for specific goods, real property, work, or services. Only after the Obligating Official signs the agreement, can the funds be considered officially obligated, and posted as an obligation in IFMS by the appropriate SFO. In its simplest form, the amount to be recorded as the obligation would be the contract price. However, in many types of contracts, the final contract price cannot be known at the time of award, and an estimate is recorded. The basic principle-record your best estimate, and adjust the obligation upordown periodically as more precise information becomes available-is used throughout the contract process until the costs are finalized. For long-term contracts, this final cost may not be known until many years afterthe contract was awarded and the funds have expired. E. AUTHORIZING PAYMENTS Many of the transactions that FCOs process will result in the establishment of obligations that will eventually require payment by EPA. As noted in Chapter 2, Section M, the Accounts Payable Certifying Officer is responsible for the payment of contract vouchers or bills. Within EPA, the process used in paying these bills is very sophisticated and detailed, and is done through the Agency's Electronic Approval System (EASY). A summary of the payment process using EASY is as follows: The Agency acquires goods and services through various contractual vehicles. As goods and services are delivered to the Agency, contractors will submit vouchers (i.e., "Public Voucher for Purchases and Services Other Than Personal," Standard Form 1034) or invoices to the Research Triangle Park Financial Management Center (RTP-FMC) requesting payment for those goods or services. Contractors are also required, under the terms of their contract, to submit copies of the invoices to the respective PO and Contracting Officer for their review and approval. Before RTP-FMC sends an invoice approval form to the appropriate PO, they will perform an initial audit of the invoice. The PO will then review the invoice, distribute the charges to the appropriate account code(s) on the form, and return the completed approval form to RTP-FMC recommending payment. Upon receiving the completed approval form, RTP-FMC will perform a final audit of the invoice, distribute the charges in the Contract Payment System (CPS), and certify the invoice for payment by the Department of the Treasury. Paper invoice approval forms are provided to POs via express mail service, internal office mail, pouch mail, facsimile transmission, and regular mail service. However, under EASY, the manual distribution of paper approval forms will be eliminated. POs will be notified via e-mail that an invoice is currently awaiting his/her review and approval. The PO will approve, or disapprove, the contractor's invoice and will distribute the cost to the appropriate account code(s) on-line using EASY. Once the PO completes his/her approval and distribution, the approval form will be transmitted to CPS. Transmitting the approval form directly to CPS will eliminate RTP-FMC's need to perform a second audit of the invoice and enable the automatic distribution of the PO's invoice charges in CPS. Once this information has been recorded in CPS, RTP-FMC will review the approval data and schedule the payment for certification by the Certifying Officer. Designated EPA approving officials (i.e., Project Officers, Alternate Project Officers, and Contracting Officers) will approve contractual invoices using EASY. EASY will provide EPA's approving officials with the ability to electronically authorize the payment of invoices and forward related payment information to CPS for payment processing. The Contracting Officer or Project Officer will review the invoice package and verify that the costs and rates being billed are reasonable and consistent with the terms of the contract. This review includes the contractor's performance and verifying the contractor bills for labor and direct/indirect costs. 76 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 For on-going contracts that are vouchered on a monthly basis, the Certifying Officer or their accounting representatives will first verify that sufficient unexpended funds remain in obligations to pay the invoice then forward the invoice(s) to the local Contracting Officer Representative (COR) in the program office for review and approval. If more than one account number and DCN appear on the invoice, the COR shall indicate the total funds to be charged against each account number and DCN. The COR shall also provide a basis (such as percentages or ratios) for the finance office to follow in charging vouchered costs to each account number and DCN. Because many EPA contracts involve numerous tasks for the contractor to perform, the COR will delegate the review of invoices to the local Work Assignment Manager (WAM) or Delivery Order Contracting Officer Representative (DOCOR). These officials are in a better position to approve the invoices since they work more closely with the contractor, and are more familiar with the actual goods and/or service being delivered. For more on the PO's rationale for charging costs, see Chapter 4, section F, "Split Funding with Multiple Appropriations". Any exceptions to using EASY for the approval of contractual invoices will be coordinated and monitored by RTP-FMC. For more information on EASY and the payment of invoices, see OCFO Comptroller policy No. 1 - 08 dated September 21, 2001. EPA acquisition regulations require that both the COR and WAM maintain files of approved invoices and all associated documentation. These files will eventually be sent to the Contracting Officer (CO) at the close of the contract. Once an order for goods or services has been placed, the Obligating Official will forward a Receiving Report to the FCO, Originator, or an Authorized Receiving Official. Often, it is simply an additional copy of the Obligating Document, usually pink. Since the SFO cannot process payments to vendors without this document, it is important for the FCO, Originator, or an authorized receiving official to ensure that it is completed and forwarded to the appropriate Financial Management Center as soon as the goods or services have been received. It is also important that the Receiving Report reflect the quantity received as well as the actual date of receipt of the goods/services, not just the date of signature, since the acceptance date will determine if any interest is owed to the vendor. Interest payments to a vendor are authorized by the Prompt Payment Act. The Act provides that any Federal agency that acquires property or services from a vendor shall be liable for interest if it does not make payment by the required payment date (30 days after receipt of a proper invoice, or the acceptance of the good/service; whichever is later) unless the contract specifies some other payment due date). Interest payments will be paid automatically, and will be charged to the same account as the original payment and to the sub-object established for interest payments. Notice of such interest payments will be provided to Allowance Holders through the voucher selection detail report, which is available for each SFO. Interest payment information is available in Financial Data Warehouse queries, however, usually the only staff who can see this information are in the finance offices. Temporary lack of funding does not relieve the Agency from its obligation to pay interest penalties. Interest due but not paid to vendors will result in the Agency having to pay additional penalties. F. RECONCILIATION Reconciliation is the process of (a) ensuring that all funding transactions (commitments, obligations, and disbursements) are posted correctly in IFMS and (b) of resolving any discrepancies so that all records are in agreement. During reconciliation, FCOs may encounter many types of discrepancies between what should have been committed or obligated and what is reflected in IFMS. The process of reconciliation is important 77 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 in ensuring that the official IFMS records reflect all of the correct accounting data, including the DCN, appropriation, program results code, and object class, as well as the amount of the transaction. The first point of contact for any obligation in question is the obligating official who signs the obligating document and forwards it to the SFO. If it is the obligating document that is incorrect, the FCO must work with the obligating official to make the necessary amendments to the document. If the document is correct, but has been recorded incorrectly in the IFMS, the FCO must work with the appropriate SFO to resolve the discrepancies. G. RESOLVING ISSUES with COMMITMENTS and OBLIGATIONS In an ideal situation, funds are committed, fully obligated, and then fully disbursed. Since this scenario is often not the case, this section will cover some of the main problems encountered after funds have been committed, and how those problems may be resolved. 1. Funds are de-committed Because a commitment is not a legal promise to pay, the originator and/or FCO may cancel it with a decommitment, prior to obligation, and commit the funds for another purpose. BEFORE CANCELLING A COMMITMENT. HOWEVER. THE FCO MUST TELL THE OBLIGATING OFFICIAL TO TERMINATE THE PROCUREMENT PROCESS AND RETURN THE ORIGINAL DOCUMENTS TO THE AH/FCO TO BE FILED OR DESTROYED. Failure to do so may result in an unwanted obligation against the Allowance Holder and could exceed the funds available. Similarly, Travel Orders which are cancelled must be deobligated from IFMS. 2. An increase of funds is needed on the commitment Occasionally, an FCO (or the originator) maybe notified by the obligating official that more money is needed on the commitment than originally planned. The FCO will be asked to increase the commitment amount in IFMS, and certify the availability of funds before the obligating official will obligate the funds. On certain documents such as simplified acquisitions there is a box to mark indicating authorization to exceed the commitment by 10% (not to exceed $100) so that going back to the FCO for small increases is unnecessary. 3. Signed obligation not reflected in IFMS or on system reports If an obligation has been processed, but is not showing on IFMS screens or system reports, the FCO should notify the SFO and send a copy of the obligating document (copies should have been sent by the obligating official to either the FCO or originator). 4. Funds obligated for amount different from commitment A commitment remains completely open until an obligation is posted by the SFO. While some spending actions take a long time for obligating officials to process, it is essential to monitor their status to ensure the actions are not lost or held up because of insufficient or incorrect information. When an obligation is posted, one of three scenarios may occur which result in the obligated amount being different from the committed amount: 1) the obligation may be greaterthan the committed amount because of a posting error, 2) the obligation may be greater than the commitment if the purchase order value 78 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 exceeds the committed amount but is within the allowable tolerances established in IFMS, or 3) the obligation may be less than the committed amount. When obligating officials sign obligating documents and forward them to the SFO to be recorded in IFMS, they are required to make a notation on the document as to whether the obligation completely or partially fulfills the commitment. This step is critical in determining how the SFO processes the obligation transaction in IFMS. A notation to close the commitment tells the SFO to process the obligation as a "final." If there is no notation on the funding document, IFMS will default to "partial" indicating that the SFO should process the obligation as "partial" only. The difference between a partial and a final obligation is apparent only if the obligated amount is less than the committed amount. If a $100 commitment is obligated for $80 as a partial, the commitment will be closed for $80 and will remain open for $20. If the $100 commitment is obligated for $80 as a final, the commitment will be closed for the full $100 and the unused $20 will be returned automatically to the Allowance Holder's (or the AHRC's) operating plan, available for other spending. If an open commitment results from the processing of a partial obligation, the FCO can easily recoup the unused dollars by processing a de-commitment transaction in IFMS. H. PREVALIDATION OF FUNDS The Agency has adopted commitments as the basis for controlling funds priorto obligations. That process has been described to OMB as EPA's funds control system. Therefore, it is essential that all funds be committed in IFMS priorto obligation. Comptroller Policy Announcement 86-19 set forth policy and related procedures for "prevalidating" commitments before award of certain contract and assistance projects. Prevalidation is a term which means that obligating officials are verifying that funds have actually been committed in IFMS by the FCO before they proceed with the obligation of a procurement or grant. It is highly recommended that obligating officials do this as a way of protecting both themselves and the Agency. With prevalidation, obligating officials are able to achieve a level of internal control on funds. The obligating official also has a greater assurance that they will not violate the Antideficiency Act by obligating funds in excess of appropriation limits or the OMB apportionment. In the past, OCFO recommended that a copy of the IFMS REQL table printout (which shows the commitment was properly recorded in IFMS) be attached to the obligating document since it would alleviate the burden of obligating officials needing to look up the commitment in IFMS themselves. However, as previously stated back in Chapter 2 in the roles and responsibilities of an FCO, "FCOs ensure that once the funds have been committed, the funds will not be altered, revised, or withdrawn prior to obligation without advance notice to the proper obligating official." Therefore, while providing a copy of the IFMS REQL is still recommended and preferred, the option of doing so can now be left up to individual office's Standard Operating Procedures (SOPs). If a commitment has not been entered into IFMS, obligating officials should not process the procurement request or assistance package until evidence of a valid commitment is provided to them. It is also recommended that obligating officials have the discretion to "freeze" commitments in IFMS in the amount equal to the amount in the funding package. This way, obligating officials know that the funds will be available when the document is ready to be signed. SFOs must record obligations in IFMS even if the obligating document does not include evidence of prevalidation. 79 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 I. OVERRUNS/RECOVERIES Overruns are upward adjustments to recorded obligations of bona fide needs in the year in which the overrun occurred. For the purposes of funds control, the term "overrun" will be used generally to encompass all additional legal liabilities that the Agency did not record correctly in IFMS. These may occur for any number of reasons which include but are not limited to; 1. unrecorded obligations 2. price changes 3. cost-rate adjustments 4. final audit billings 5. court or other claims 6. payroll adjustments True "cost growth overruns," in the context of contracts management, are distinctly different from the situations above. In the situations above in that when handled correctly, the Agency does not have a liability in excess of what is recorded. This situation involves a "Limitation of Funds Clause" and/or "Limitation of Cost Clause" in contracts, and an "early warning" notice from the contractor to the Contracting Officer (that costs are likely to be greater than estimated), and a revised funding decision by the Agency. The purpose of this arrangement is to enable the Government to take notice of the status of contract performance and to take appropriate action. Based on the government's evaluation of the new estimate, the government may modify the contract to increase or decrease the cost, modify or cancel the work, or delay or accelerate the project. If more funds are needed on the contract, the Contracting Officer will coordinate with the Contracting Officer Representative (COR) and the obligation will be increased in advance of the liability occurring. Paying Overruns For overruns occurring in a current fiscal year that are the result of court settlement or other legal claim brought on by a private individual (i.e FOIA requests, or Notification and Federal Employee Anti- discrimination and Retaliation Act - No FEAR - Act of 2002) where a judge has ruled against the Agency, the settlement and/or claim is paid directly out of the appropriate NPM's budget who's program relates directly to the claim. Payment of legal claims against the Agency resulting from a group or company settlement will usually be paid out of the Agency's Centrally Managed Accounts (CMA), as described in Section L of this Chapter. Prior year overruns that lack appropriate funds to make the required payments in the current year should be obligated and paid with accounting data that is valid for the year of the overruns. When these obligations or payments involve a legal requirement to pay using prior budget years funds (either expired multi-year funds but not canceled or prior-year no-year funds) the following applies: 1. Program Offices are not required to submit new commitments to cover these obligations—in fact the current system (IFMS) does not allow that option. 2. The Contracting Officer or obligating official should fund the obligation with a modification with the appropriate accounting information, based on when the work was performed. Previous prior year funds on the contract, simplified acquisition or other type of order can be increased as appropriate to cover the cost overrun. 80 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 3. Funds should not be requested from the Program Offices or Finance Offices. Prior year funds are available and appropriate amounts should be obligated to cover the charge. 4. After the Contracting Officer or obligating official fund the charges, the prior year funds can be used to pay the charges with the normal approval process. The Office of Budget monitors total appropriation and OMB apportionment authority to ensure funds are always available for these overruns. This will not cause an Anti-deficiency Act violation. Office of Budget (OB) does not issue funds for this type of cost. The one exception would be for charges against the multi-year funds that have been canceled (see Chapter 1, Section G "M" Account Legislation). For the multi-year appropriations, a reserve made up of prior year expired funds is available to cover these overruns. While these funds are available to cover charges against overruns, they are not available to pay for new work. For the no-year appropriations, the Office of Budget maintains a fiduciary reserve to cover such expenses. Approval is not required from the Office of Budget. However if the prior obligation is over $50,000, the obligating official or payment official should notify the Office of Budget, Control Team Leader, via email. The notification should include the total amount of charge (above and beyond the unliquidated obligation) broken down by the Budget Fiscal Year, appropriation and amount. If the overrun involves prior-year no year funds or multi-year funds that have been canceled (spending authority is canceled 9 years after year of authorization), the Director, Office of Budget, at his/her discretion, may ask the Program Office responsible to reimburse the fiduciary reserve for the overrun with current dollars if the Office of Budget believes there is a need to replenish the fiduciary reserve to ensure that the Agency maintains up to 1 % of current year appropriations to use as a fiduciary reserve. Recoveries are downward adjustments to recorded obligations. Examples of these are deobligated funds, invalid obligations, refunds, cost-rate adjustments, and rebates. Refunds and rebates do not necessarily adjust obligations. They sometimes offset to expenditures. Overruns and recoveries are routine. They are a normal part of the accounting process for recording and finally liquidating legal liabilities. There is no time limit for upward or downward adjustments which require an accounting entry when overruns and recoveries occur. They may occur several years after a contract or delivery order has been closed. They also may occur well after an appropriation has expired and/or has been cancelled and funds are no longer available to the Agency for obligation or expenditure. The following guidance is given when handling overruns and recoveries: 1. All invoices are to be forwarded to the appropriate accounts payable office (FMO) who reviews for validity based on holding an obligating document (e.g., a purchase order) and a receiving report. 2. If invoices are in excess of the recorded obligation, the FMO will require the Contracting Officer (in conjunction with the Contracting Officer Representative (COR)) to establish whether the vendor is entitled to payment (whether EPA has a legal liability for the balance) before the Office of Financial Management (OFM) will record the overrun and make payment. If the adjustment is a non- discretionary overrun and therefore there is a legal liability, the overrun must be recorded as soon as possible and there is no reason for OAM to call OB. There is no decision to be made except exactly where OFS should post the charge (sometimes the OB has some discretion between overlapping appropriations that may have been available at the same time). Whether or not there 81 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 are sufficient funds to pay the bill is an issue that OB will address using its authority listed below. If there are insufficient funds, see the section on Antideficiency Act (ADA) violations (Chapter 4-A-A). 3. E-Mail notification is to be provided to the Office of Budget (OB) by the FMO through the Regional Budget Office prior to posting any individual overrun in excess of $50,000. This only serves as a courtesy notification to alert OB of the action. Neither the OB nor anyone else can commit expired funds or certify expired funds availability for which there may or may not be a lapsed unobligated balance in the U.S. Treasury. The OB must not be asked to do either. But again sometimes the OB has some discretion between overlapping appropriations may have been available at the same time and need to be made aware before the charge is posted. An overrun less than $50,000 can be posted without this notification. 4. The Office of Budget may exercise its authority to take any of the following actions relating to overruns or recoveries based on the circumstances, timing, and amount of the transaction: Expired Funds: a. indicate the correct lapsed unobligated balance in the U.S. Treasury (if it has not yet been cancelled) to post the accounting to within the Agency (sometimes the OB has some discretion between overlapping appropriations that may have been available at the same time); Unexpired Funds (and cancelled funds which must be paid from currently available appropriations): b. cover overruns from a Centrally Managed Allowance (CMA); c. require a Program Office to cover the overrun from their current allowance; d. recertify recovered funds back to the Allowance Holder; e. withhold recovered funds to offset overruns, or fund a new initiative or high priority at the discretion of Agency Management; f. net out overruns against offsetting recoveries; or g. credit expenditures which automatically increase the available balance. With regard to overruns and recoveries (upward and downward adjustments) all accounting adjustments are properly chargeable to the original source-year accounting from which the liability (obligation) was incurred. The Principles of Federal Appropriations Law provides the rationale for this as follows: "Upon expiration of a fixed appropriation, the obligated and unobligated balances retain their fiscal-year identity in an "expired account" for that appropriation for an additional five fiscal years. As a practical matter, agencies must maintain separate obligated and unobligated balances within the expired account as part of their internal financial management systems in order to insure compliance with the Antideficiency Act. During the five-year period, the potential for an Antideficiency Act violation exists if identifiable obligations chargeable to one of those five years exceed the sum of the obligated balance forthatyear plus the amount available for adjustment from the unobligated balance for the same year. Should this happen, the excess can be liquidated only pursuant to a supplemental or deficiency appropriation or 82 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 other congressional action. See B-179708-O.M., June 24, 1975 (applying same principle during first two post-expiration years under prior law). At the end of the five-year period, the account is closed. Any remaining unexpended balances, both obligated and unobligated, are canceled, returned to the general fund of the Treasury, (294) and are thereafter no longer available for any purpose. A repayment is credited to the appropriation initially charged with the related expenditure, whether current or expired. If the appropriation is still current, then the funds remain available for further obligation within the time and purpose limits of the appropriation and OMB apportionment. However, if the appropriation has expired for obligational purposes (but has not yet been closed), the repayment must be credited to the expired account, not to current funds. See 23 Comp. Gen. 648 (1944); 6 Comp. Gen. 337 (1926).@ EPA requested and received the statutory authority for this phase to last for seven years after the period for which the appropriation is available for new obligations. This request was granted to start with two-year appropriations beginning in FY1999 (i.e. FY1999/2000 fund ing). Two-year appropriations enacted prior to FY 1999 continue to be cancelled 5 years after expiration. Tolerance Levels For small overruns, amounts have been established in IFMS which allow FMOs to pay bills that exceed the recorded obligations up to certain tolerance levels without requiring the obligation to be increased. The Transaction Category Reference Table (TCAT) shows the tolerance levels, based on percentages, and the maximum amount paid for certain transactions. Here are some examples: Transaction Description Tolerance % MAX AMT (Per Line) Unobligated Payment 10% $500.00 Contract Obligation 10% 500.00 Payment Vouchers 10% 500.00 Transportation Invoice 99% 500.00 Travel Vouchers 25% 300.00 Miscellaneous Order 10% 100.00 Direct Disbursement 10% 500.00 J. RATIFICATION OF UNAUTHORIZED PROCUREMENTS The act of ratification means to "approve or confirm". There are times when offices acquire items without utilizing the appropriate procurement process. Thus, a procurement was "unauthorized". An unauthorized procurement can also occur when a procurement action was taken by an individual who is without procurement authority, or when a procurement action is taken by an individual acting beyond the limits of his/her delegated procurement authority. Unless the item can be returned, an unauthorized procurement will be considered a type of appropriation overrun since an upward adjustment to what was recorded (which was zero) must be made. If an office receives something that was never officially ordered, the office should return the item to the vendor. If, however, the office decides to keep the item, or if it was a service already provided (e.g. training) rather than a product, then the vendor may have legal entitlement to payment and a ratification of the procurement must be done. However, OAM may not always approve an unauthorized procurement. For example, if appropriated funds were not available for a particular item, OAM may not approve the unauthorized 83 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 procurement. When requesting a ratification to OAM, FCO's need to certify that funds were also available at the time the unauthorized procurement occurred. The following is a brief overview of the procedures for correcting an unauthorized procurement. For more information, see EPA Contracts Management Manual 1900, Section 1.1,"Ratification of Unauthorized Commitments" dated 4/7/04 at http://epawww.epa.gov/oamintra/policy/cmm.pdf 1. Concept OAM uses the term "Unauthorized Commitment," to mean an agreement that is not binding solely because the Government representative who made it lacked the authority to commit to that agreement on behalf of the Government. In this context, the term does not relate to the FCO's process for the reservation, or "commitment" of funds. To avoid confusion, the term "Unauthorized Procurement" is used for this discussion. The provisions of this directive apply to all unauthorized procurements, whether oral or written and without regard to dollar value. Examples of unauthorized procurements are: a. ordering supplies or services by an individual without contracting authority; b. unauthorized direction of work through assignment of orders or tasks; c. unauthorized addition of new work; d. unauthorized direction of contractors to subcontract with particular firms; or e. any other unauthorized direction which changed the terms and conditions of the contract. 2. Ratification Approvals and Concurrences The Chief of the Contracting Office is the ratifying official, provided that this individual has redelegable contracting authority. For ratification actions which arise in regional offices or laboratory sites, the Chief of the Contracting Office to whom the activity functionally reports is the ratifying official, provided that this individual has redelegable authority. The responsible Chief of the Contracting Office is the ratifying official for actions which arise in regional or laboratory sites which do not functionally report to a Contracting Officer. All proposed ratification actions of $250,000 or more forwhich the Chief of the Contracting Office is not the ratifying office shall be forwarded for review to the responsible OAM Associate Director prior to approval by the ratifying official. 3. Procedures The procedures used by OAM in approving unauthorized procurements involve numerous steps. The office involved must notify the cognizant contracting office by memorandum of the circumstances surrounding an unauthorized procurement. The notification memorandum shall include: all relevant documents, documentation of the necessity for the work and benefit derived by the Government, a statement of the delivery status of the supplies or services associated with the unauthorized procurement, and a list of procurement sources solicited (if any) and the rationale for the source selected. 84 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 If only one source was solicited, a Justification for Other than Full and Open Competition (JOFOC) will be required in the memo. The memo must also address what measures will be taken to prevent any reoccurrence of an unauthorized procurement. Most Assistant Administrators and/or SROs have an internal policy allowing for The Division Director (or equivalent) of the responsible office and the SRO to approve the memorandum. If expenditure of funds is involved, the program office shall include a Procurement Request/Order, EPA Form 1900-8, with funding sufficient to coverthe action. The appropriation data cited on the 1900-8 shall be valid for the period in which the unauthorized procurement was made. Obtaining approval for an unauthorized procurement may take some time. The payment of interest owed to the contractor may become an issue as well. OFM will determine if payment must be made for any late fees, and/or penalties. K. RECERTIFICATION OF FUNDS Recertification is defined by EPA as the reissuance of deobligated prior year funds in a subsequent fiscal year by the Office of Budget (OB) to Allowance Holders (AHs) for commitment, obligation and expenditure. Deobligations are defined by GAO as "an Agency's cancellation of downward adjustment of previously recorded obligations". They may result from several factors, such as services that cost less than obligated amounts, change in requirements, failure to perform, termination, invalid obligations, refunds, cost-rate adjustments, rebates, etc. Deobligated resources for multi-year and no year funds do not need to be "recertified" IF they are reobligated in the same fiscal year they were issued. However, deobligated prior year resources for no-year appropriation accounts DO NEED to be "recertified" before they are made available for reobligation. Recertification is only possible if: 1. the life of the appropriation has not expired, 2. recovery authority has been granted by the OMB in the Agency's apportionment, and 3. the criteria listed in Section III.K.2 are met. During the 2-year period of availability, deobligations of two-year funding are recovered to Allowances automatically and do not have to be reissued. For appropriations that do not automatically recover or carryover into the next fiscal year (Superfund, LUST, Oil Spills, STAG, B&F), it is possible to reduce a prior year obligation (deobligation) and reissue those funds by recertification so they can be made available for obligation (recertification) in a subsequent fiscal year (reobligation). The Office of Budget (OB) estimates recovery authority for each appropriation and requests this authority annually in an OMB apportionment. When prior year obligations are deobligated, the funds "recover" to the U.S. Treasury and not to Agency allowances. Consequently, the funding must be retrieved by EPA using the recovery authority in its apportionment before the funds can be recertified to AHs. It is possible for more funds to be recovered during the fiscal year than the amount of the apportionment recovery authority. The Agency, however, only needs to establish as much recovery authority (of net recovered dollars) as it anticipates collecting, reissuing and obligating before the end of the fiscal year. 1. When funds do not have to be recertified: 1. As noted in section IIC of this chapter, any unobligated funds from the EPM and S&T appropriation automatically recover in their second year of availability and do not have to be recertified to be reissued. 85 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 2. Funds that are deobligated during the same fiscal year in which they were originally obligated do not have to be recertified. These funds automatically return to Allowance Holders as the deobligation is processed through IFMS and the AH's unobligated balance is increased. 3. For unexpired appropriations, recertification is not required by the OB when shifting funds between a contract base and its option periods or between contract option periods. However, these offsetting transactions are legal deobligations and reobligations and do require apportionment recovery authority. As such, they will be recorded and maintained in the formal IFMS sub-system called the Contracts Payment System (CPS). The offsetting CPS entries, which net to zero, will not impact IFMS budget tables or create temporary fluctuations to budget balances. The OB will monitor overrun/recovery activity through IFMS reports to ensure that OMB apportionment authority is not exceeded. Also, all contract funding is subject to the "bona fide needs rule" which states that an obligation against an appropriation is valid only if it relates to an actual need existing within the life of that appropriation. Contracting Officers (COs) and Contracting Officer Representatives (CORs) must ensure, depending on contract type, that obligations are entered into appropriately and responsibly. 8. Recertification is not required by the OB when EPA establishes large "umbrella" contracts for site activities (such as Superfund) and designates the specific sites to the vendor at a later date. The contract is recorded without site coding information in the accounting data. At the point where sites are designated by EPA, the accounting records are changed to reduce the "umbrella" contract accounting and designate the site-specific accounting. Such activity does not modify the contract, change the scope-of-work, change the funding, or change the Agency's legal liability in any way. 5. Replacement Grants. When an assistance agreement recipient is unable to perform the agreement even if the period of availability for obligation has expired, the Agency may issue a "replacement grant" to another recipient to complete the project. The replacement grant concept is discussed in Chapter 10 of GAO's Principles of Appropriations Law. An important feature of the replacement grant concept is that the scope of work for the replacement grant must be the same as the original (or the remaining portion of the original) grant. Funds that are still available for expenditure (unexpired) may be deobligated and reobligated to a replacement grantee. This does not violate the bona fide needs rule because the replacement grant is simply fulfilling the purpose for which the funds were originally obligated. The obligation must be liquidated prior to cancellation of the funds. 2. When funds do need to be recertified: For all prior year no-year funds (ie. STAG, Superfund, LUST, and OIL), the unliquidated balances cannot be moved from one assistance agreement or contract to another without having the funds recertified. Funds must be deobligated in IFMS and recertified to the current fiscal year. These recertified funds may then be obligated on a new assistance agreement or contract. For assistance agreements, recertification is required when funds from one budget period are transferred to a subsequent budget period through the execution of a continuation award. The requirements for recertification of no-year funds applies to all funding vehicles (contracts or grants) including grants that fall under 40 CFR § 35.118 which states: "Subject to any provisions of law, if a recipient's Financial Status Report (FSR) shows unexpended 86 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 balances, the Regional Administrator will de-obligate the unexpended balances and make them available, to either the same recipient in the same region or other eligible recipients, including Indian Tribes, or other Tribal Consortia, for environmental program grants." This means that ALL grants (in both the Regions and HQs) containing no-year funds MUST go through a recertification process, whereby, OB will review and reissue the funds to the appropriate program office or Regional Administrator. This affects grant transactions normally called "carryovers" used for continuing state grants. For contracts, recertification is NOT required when funds are between option years or between delivery orders within the same contract. The purpose of recertifying no-year funds into the current FY follows the basic rule of Availability of Appropriations as to Time with 31 U.S.C 1502(a) and the bona fide needs rule in 31 U.S.C 1341 (a) which requires that an obligation be recorded in the correct fiscal year that the need arose in - and not when the item or service is actually going to be used or delivered. Generally, Superfund resources are recertified back to the program from which the funds were deobligated. Any request directing resources into a program area other than where the funds were originally obligated will be coordinated with the Headquarters Program Office to ensure no impact to the program. Superfund funding deobligated from other Federal agency allocation accounts are returned back to EPA. When they exist, administrative/operating expenses ceilings and travel ceilings can be recovered along with the associated funding and be recertified together. As with carryover, deobligated/recertified funds retain the Congressional restrictions as to purpose, time, and amount that applied when they were originally appropriated. Annual reprogramming restrictions, issued after the Enacted Budget is completed in the Advice of Allowance Letter, also apply to recovered funds. EPA has authority to reissue or reprogram recovered balances for new priorities, up to the Congressional reprogramming limitation without Congressional notification provided. Requests for re-issuance of deobligated funds for reasons other than those listed above, such as a new contract with a new scope-of-work, does require recertification by the OB before the end of the fiscal year to make the funds available for reobligation. AH recertification requests for deobligated, unexpired, prior year funds must be sent in writing to the OB through the SBO/ARA. Approval of those requests is subject to a number of criteria, however, and there is no guarantee that the funds will be recertified. Allowance Holders do not have automatic entitlement to any recoveries requiring recertification until they have been reissued to them in IFMS by the OB. In order for the OB to approve a request for recertification, the following criteria must be met: The Agency must have received sufficient recovery authority in the currently approved OMB apportionment for the specific appropriation for which funds are being deobligated. The Agency must have a sufficient recovery balance in the specific appropriation in which funds have been deobligated to cover both a (management fiduciary allowance) and the recertification request. Overruns and recoveries from upward and downward adjustments to prior year appropriations continually offset each other and overruns must be offset before any recovery balance gets reflected. The specific deobligation for which the recertification is being requested must have been posted inlFMSand be reflected as a recovered balance on IFMS screens and computer reports. 87 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 The RPIO must have a sufficient net recovery balance to cover their recertification request after their overruns and recoveries have been netted against each other. It is very possible that an overrun by another AH in the same RPIO may have consumed the recovery. e. Once sufficient recoveries to cover fiduciary responsibilities have accrued, the OB will consider recertification requests, by RPIO, on a first come first served basis. f. The written request for recertification must sufficiently justify the reissuance of the funding and be approved by OB. g. The RPIO, through a Contracting Officer or Grants Award Official, must be able to obligate the recertifiedfunds before the appropriation expires and the obligation must be for a bona fide need of the current fiscal year. L. CENTRALLY MANAGED ALLOWANCES (CMAs) At EPA, there are a number of centrally managed allowances which are controlled by the Agency's Allotment Holder (OB). The Advice of Allowance process for funds control was previously defined in Chapter 1 and detailed earlier in Chapter 3. These centrally managed allowances are not established for the purpose of withholding funds from obligation. They are Advices of Allowance being actively managed and which may fluctuate during the year as funds are reprogrammed in and out. These funds are available for obligation directly from the centrally managed allowance by the Agency AH. The CMA AHs are identified as follows: EPA HQ CMA AH 92 Cancelled funds / misc. items AH 94 HQ/NPM CMA AH 9H Regional/NPM CMA AH 9R Administrator's CMA AH 9Z Allocation Transfer CMA AH 93 Cancelled funds issuances (M Account).AH 95 AH funds in AH 95 for cancelled obligations which are reinstated have been disbursed directly from the CMA since FY 1991 by the agency Allotment Holder. These allowances, which are centrally managed for a variety of reasons, represent such amounts as: 1. authority (such as reimbursable authority and recovery authority) that does not become a resource until agreements are signed, or collections are made, or deobligations occur (AH 92 and AH 94). 2. funding that has been apportioned to EPA but has been allocated to another Federal Agency and will be obligated outside of the Agency. Frequently, these allocation transfers are written into the legislative history. The CMA ensures that EPA will not also obligate this funding (AH 93). 3. funding awaiting criteria for Agency-wide distribution; etc. (AH 9H and AH 9R). 4. small fiduciary amounts used historically as a primary funds control technique for protection against upward adjustments to obligations (overruns). Such sound management practice helps to ensure that Anti-Deficiency Act (ADA) violations do not occur in unexpired appropriation accounts. A lapsed ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 unobligated balance protects against ADA violations from overruns in expired appropriations for the five years until they are cancelled (AH 92 and AH 94). 5. liabilities from potential "M" Accounts reinstatements - In Chapter 1 (section G), "M" account requirements in the National Defense Authorization Act of 1990 were described. The process for reinstating and liquidating obligations that have been cancelled after 7 years involves a set aside of up to one percent of annual appropriations. EPA establishes this contingency amount for each fixed appropriation (no-year appropriations are not affected) in AH 92 & AH 94 at the beginning of each fiscal year. These funds are designated for potential legitimate liabilities related to obligations which were canceled and must subsequently be reinstated. If obligations actually are reinstated, that portion of these funds are moved to AH 95. At the end of each fiscal year, any funds remaining in the AH 92 and AH 94 allowances are carried over (if two-year e.g. EPM, S&T, OIG) or lapsed if expiring (e.g. EPM C/O, S&T C/O) to cover liabilities for the five/seven years until that account is cancelled. For example, for appropriations that expired on September 30, 1994 (FY 1994), unliquidated obligations will be cancelled on September 30, 1999. For more on "M" accounts, see Comptroller Policy Announcement 91-11 (AH 92 and AH 94) and 96-05 (Revised Procedures for Requesting M Account Funding). 6. actual disbursements for legitimate liabilities which were cancelled in accordance with "M" Account legislation but needed to be reinstated to pay subsequent bills received. Funds to reinstate and liquidate these obligations are moved to AH 95 from the contingency funds held in AH 92 and AH 94 for this purpose (AH 95). There a number of factors that are considered in establishing CMA levels including: 1. The general overrun or recovery history of a particular appropriation (e.g. the SF and R&D/S&T appropriators have always had higher net recovery levels than AC&C/EPM). 2. The amount historically held for a specific appropriation and how successful that has been. 3. The relative level of AM@ account reinstated data that must be paid from current year accounts. 4. The size of the appropriation (is it $100 M or $1 billion). 5. Lastly, OB expertise, special circumstances, and the comfort level of OB Director are contributing factors. CMAs are so named because activity is monitored and levels are actively increased or decreased by OB as circumstances dictate. Whether it is a 2-year or no-year account (e.g. unlike the process of expiration then cancellation in 2- year appropriations, all no-year unobligated balances have rolled forward. The SF CMA must protect the appropriation against all liabilities since FY81 there is a Comptroller General decision that basically says: no-year liabilities from prior years cannot be paid from subsequent appropriations in the same account. In other words, a $4 M overrun to FY95 SF cannot be paid from our FY99 SF appropriation, or FY96-FY98 either. It is therefore, important to carry over a significant amount of old no-year funding from year to year. 89 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 IV. MANAGEMENT REPORTING and END-OF-YEAR CLOSEOUT AHs/FCOs usually prepare summary level Status of Funds reports for their management in accordance with the standard operating procedures of their organization. The report is usually prepared monthly and frequently takes the form of a Excel spreadsheet showing the status of funds at the appropriation level, the program results code/object class level, or by organization. The spreadsheet can include columns showing 1) the Approved Operating Plan, 2) commitments, 3) obligations, 4) disbursements, and 5) the available balance. To get the necessary information for these spreadsheets, FCOs can use either Orbit reports (when available), Financial Data Warehouse reports, or print the appropriate screens from IFMS. Procedures do not generally change to accommodate end-of-year closeout, although the frequency of reconciliation and reporting should increase. If reconciliation is performed routinely and faithfully throughout the year, there should not be a need for extensive corrections at year end. A. UNLIQUIDATED OBLIGATIONS An unliquidated obligation is the amount of outstanding obligations or liabilities that have not been expended or liquidated (GAO Budget Glossary). The implications of an obligation not being fully paid is that either all the goods or services have not yet been received and accepted by EPA or that the Servicing Finance Office (SFO) has not received the supplier's (or vendor's) final invoice or bill. If a final invoice has been received and the obligation is fully satisfied the SFO should remove (deobligate) any remaining obligation in IFMS thus liquidating the entire recorded obligation. In order for the SFO to deobligate funds so that obligations equal the disbursed amount, the FCO and/or originator should determine that there will be no further payments against the obligation. Any deobligations of current year funds automatically return to the Allowance Holder's available IFMS balance. If funds are deobligated after an account has expired, the recovered balance is posted to an expired Treasury account and is only available to the Agency thereafter to liquidate legal liabilities (overruns) to the previously recorded obligations. Unliquidated balances for all prior year no-year funds cannot be moved from one assistance agreement or contract to another without having the funds recertified. Funds must be deobligated in IFMS and recertified to the current fiscal year. These recertified funds may then be obligated on a new assistance agreement or contract. This policy applies also to grants that fall under 40 CFR 35.118. Also, any movement of funds between assistance agreement or contracts is still subject to the Agency's competition policies. For assistance agreements, recertification is required when funds from one budget period are transferred to a subsequent budget period through the execution of a continuation award. Reviews of unliquidated obligations are required bylaw (31 U.S.C. 1554(c)). The Office of Inspector General (OIG) within EPA specifically requires the agency to perform an unliquidated obligations review on an annual basis. The Office of Financial Management (OFM) is responsible for initiating and coordinating the Agency's review of unliquidated obligations as often as deemed appropriate. The Agency's policy and procedures on how unliquidated obligation reviews are to be conducted is described below. 1. OFM will provide the reports (with the exception of contract and interagency agreement obligations) and detailed instructions that form the basis on which the reviews of unliquidated obligations will be conducted. The reports will identify inactive unliquidated obligations of 180 days or more (90 days for travel). OFM will verify that these reports match the Agency's official accounting records in IFMS. OFM submits these reports to the Office of Acquisition Management (OAM), the Office of Grants and Debarment (OGD), appropriate Headquarters Allowance Holders, and Regional Contracting Officers, for review. 90 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 2. The reviewing official analyzes the unliquidated obligations to identify those items which are not valid or viable. A certification that the review was conducted is then provided by the certifying official to the Director, OFM. 3. The Senior Resource Official (SRO) will have primary responsibility for certifying that the review was completed for their RPIO. At Headquarters, the SROs will have their Allowance Holders and Responsibility Centers review all inactive, unliquidated travel and simplified acquisition obligations. Regional SROs will ensure that appropriate staff review all inactive, unliquidated obligations administered by their Region. Procedures 1. Contracts The Research Triangle Park - Finance Center (RTP-FC) will submit the unliquidated obligations report directly to the contracting offices (both in Headquarters and in the Regions) for review. The contracting office will take action to deobligate all invalid/non-viable obligations in coordination with the Contracting Officer Representative (COR) and the FCO. Forthose deobligations involving unexpired funds, the FCO must send a PO/PR to the contracts office so that a funding modification can be made on the contract. The Contracting Officer (CO) or FCO can then send the signed deobligating document to the finance center so that the funds can be deobligated. This process will ensure that the FCO is aware of any increased balances appearing in IFMS forthe program office's budget. Afterthe funds have expired, the FCO will not need to be involved in the process. The CO can coordinate directly with the finance office. For inactive contracts with a balance under $100, the Chief, RTP-FMC is delegated authority by the Director, OAM to routinely deobligate remaining funds. Before processing deobligations, RTP-FMC will notify the COs of the proposed actions. If these deobligations involve unexpired funds, the COs and/or POs must again ensure that the FCO is also aware of these deobligations taking place. If the COs do not wish funds to be deobligated, they must contact RTP-FMC within 30 days. 2. Interaqency Agreements (lAGs) For Headquarters administered lAGs, the Cincinnati FC will distribute the listing of Headquarters lAGs to the Grants and IAG Management Division (GIAMD). For Regionally administered lAGs, the listing of Regional lAGs will be distributed to the remote printer bins of the Regional SROs ordesignees. Reviewing officials in GIAMD and the Regions will discuss the projects with Project Officers to determine whetherthe obligation is valid and viable. If it is, the reviewing official will ask the Project Office to request an appropriate project period extension. If the Project Officer indicates inactive projects are complete, GIAMD staff or the Region will contact Cincinnati-FMC to ensure that there are no unpaid bills and to verify the unliquidated obligation amount. GIAMD or the Region will notify the other agency of the unliquidated amount and advise that the amount will be deobligated and the project closed out unless the other agency notifies EPA within 30 days of the date of notification that the amount is incorrect or disputes the close-out for some other reason. Cincinnati-FMC will record a deobligation when a written notice is received from GIAMD or the Region after the 30 days. 3. Grants and Cooperative Agreements For Headquarters administered grants and cooperative agreements, OFM will distribute the listing to GIAMD. For those administered Regionally, the list will be distributed to the Regional SROs or designees. 91 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 The Assistance Award Official or designee must deobligate invalid or non-viable items by (1) soliciting feedback from the program office and taking action on their requests to deobligate funds under the grant/cooperative agreement, or (2) taking action on a final Financial Status Report (FSR) from the recipient indicating an unobligated balance of Federal funds. The Assistance Award Official should take aggressive follow-up action to ensure timely submission of either document. If a final Financial Status Report indicates a balance of Federal funds that has not been obligated by the grantee, the Headquarters/Region Grants Award Official will (1) deobligate the balance if the grant/cooperative agreement has ended, (2) consult with the Project Officer if there is a subsequent budget period for which the funds may be carried over to allow the recipient to continue work, or (3) issue an Assistance Adjustment Notice or amendment directing the relevant Finance Office to take appropriate action as specified by the Award Official or designee. All other items (e.g. travel, simplified acquisitions, Government Bills of Lading, Federal Express, and utilities') OFM will distribute reports sorted by Allowance Holder Responsibility Center (AHRC) to the remote printer bins of Headquarters SROs and Regional SROs ordesignees. The AHRC will annotate directly on the report items to be deobligated and submit a copy of the report and a signed cover memorandum to the appropriate SFO. Based on these annotations, the SFO will record the deobligation for those items which have been designated as invalid and/or non-viable. For travel and miscellaneous items under $100 (except for Permanent Change of Station travel and billings from other Federal agencies) on which there has been no activity for 90 days and for which there is no justification, the SFO will routinely cancel the unliquidated obligations. AH/FCOs are encouraged to use direct IFMS access to deobligate travel. AH/FCOs staff should also ensure that final travel vouchers are marked "FINAL" before sending them to their SFOs for payment. This will alert the SFO to record the voucher as a final payment in IFMS which will deobligate any remaining balance. Paying travel vouchers as final will minimize the review burden of unliquidated travel orders. Other Requirements The RPIO and the AH will continue to review all current year obligations and commitments on a routine basis to ensure they are valid and accurate and properly recorded in IFMS. The FMO will continue to certify the final General Ledger Trial Balance that includes both current and prior year obligations. To assist the RPIO and AH in performing the reviews, the FMOs are required to retain all (except for Superfund) financial documents (including supporting documentation) for three years after project completion or delivery of goods and services. Superfund legislation requires that all financial documents be retained for 20 years. For more on information on conducting unliquidated obligation reviews, see Office of Comptroller Policy Announcement 96-04 "Review of Unliquidated Obligations." B. END-OF-YEAR CLOSE OUT As the fiscal year nears completion, OFM and the Office of Budget OB issue workplans and timetables for closeout activities of the IFMS budgeting and accounting modules. The memos issued to SBOs, AHs, and FCOs provide key cutoff dates for budget and financial transactions (i.e. final reprogrammings, entering 92 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 commitments into IFMS, submitting purchase requests/orders and grant funding packages to OAM and GIAMD). Expiring funds that remain uncommitted in IFMS maybe reviewed by the OB as early as the end of August for possible redistribution to other Allowance Holders. The Agency will make every attempt to redirect funds that become available to ensure that expiring funds are carefully managed to achieve maximum benefit. No expiring or lapsing funds should be requested and/or obligated except to meet a legitimate, or bona fide need arising in the fiscal year for which the appropriation was provided. The "bona fide needs" rule is explained in detail in Chapter 2, Federal Laws and Guidance. Restated, the rule means that one year appropriations are available only for the needs of the current year and are not available for the needs of a future year. For multiple-year appropriations, the rule is that the appropriation is available for obligation to meet a bona fide need covered by the period of the appropriation. The bona fide need rule does not apply to No-Yearfunds prospectively (forward funding). It only applies by prohibiting satisfaction of a prior year liability with subsequent appropriations. As previously discussed, the bona fide need for an assistance agreement arises when the Agency decides to stimulate and support the recipient's project rather than when that project will be physically carried out or payments made under the assistance agreement. In addition, for expiring appropriations, the Agency's policy for obligations for services on non-severable contracts requires that performance starts no later than September 15 in order to be considered a bona fide need. The program office must include a statement with the commitment that explains why it is necessary that the service(s) start in September, and that they are not severable in nature. Statutory and regulatory changes (Federal Acquisition Streamlining Act of 1994 (FASA) section 1073, and Federal Acquisition Regulation (FAR) 37.106), permit agencies to obligate annual ("one year") appropriations to acquire up to twelve months of severable services that begin in one fiscal year and end in the next fiscal year. The EPA Office of General Counsel has opined that these provisions also apply to acquisitions funded with multi-year appropriations (such as the "two-year" appropriations generally provided to EPA). What this means, for example, is that EPA may obligate FY2004/2005 funding to fund twelve months severable services that begin in FY 2005 and end in FY2006. [Severable services are those which are continuing and recurring in nature (such as window washing services), while non-severable services are those that are characterized as a single undertaking (conducting a study and preparing a final report thereon). Non-severable services may be charged to the appropriation current at the time the contract was made, even though performance carries over into a subsequent fiscal year. In preparation for the closing of the fiscal year, particularly the last few weeks of September, FCOs should review all open commitments in IFMS on a daily basis to verify that commitments are being obligated in a timely manner. As mentioned earlier, an end-of-year memo goes out which establishes closing/cutoff dates for financial transactions. OAM and GIAMD will have specific deadlines regarding the receipt of funding documents. Priority will be given to processing financial transactions that are citing expiring funds. However, as long as a funding document was received in OAM/GIAMD by the established cutoff date, the transaction should be processed by the end of the fiscal year. FCOs and the obligating officials should keep in contact with each other to make sure the document(s) does indeed get obligated by the end of the fiscal year. Open commitments should be reviewed in the following manner: 1. Identify commitments that should and/or must become obligations by September 30. The FCO should ensure that the dated obligating document reaches the proper SFO by September 30. The FCO should send the SFO a duplicate copy of the obligating document if they do not receive the original document; 2. Unnecessary commitments should be cancelled and decommitted; 93 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 3. Identify commitments that will not be obligated by September 30. If a commitment using expiring funds will not be obligated by September 30, the commitment should be cancelled and the funds used for a priority which can be obligated by the end of the fiscal year. If appropriate, funds received in the new fiscal year may be used for the cancelled item by renewing an action in the procurement process. At the end of the "12th month" accounting period (through September 30), the Allowance Holder and their RPIO must review their final commitment and obligation data and forward any corrections to their SFO. After September 30th, a "13th month" accounting period remains open for two weeks or less to capture documents signed prior to midnight September 30 which are still coming through the process to be recorded. At the end of this 13th month period, OFM officially reports end-of-accounting data to the Treasury and to OMB. 94 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 CHAPTER 4: SPECIAL SUBJECT ITEMS I. SPECIAL SUBJECT ITEMS A. VIOLATIONS: CREATION, REPORTING, and PENALTIES 1. Antideficiency Act (ADA) Violations Section 1514 of Title 31 of the U.S. Code requires each head of a Federal Executive Department or Agency to prescribe by regulation a system of administrative control designed to restrict obligations and expenditures to the amount of budgetary resources available. This Agency regulation is subject to the approval of the Director of the Office of Management and Budget OMB. This Act also provides for reporting of violations of these regulations and for penalties. These requirements are supplemented by instructions and a sample letter contained in OMB Circular A-11 (Part 4) (formerly OMB Circular A-34). The restrictions of the Antideficiency Act ADA (31 U.S.C. 1341 -42,1349-51, and 1511-19) are the basis for EPA's policies on controlling funds. In its current form, 31 USC 1341, 1342, and 1517(a) and the ADA prohibit: a. "Making or authorizing an expenditure from, or creating or authorizing an obligation under, any appropriation or fund in excess of the amount available in the appropriation or fund unless authorized by law." An accounting error occurring when an obligation is posted to an incorrect appropriation is subject to audit and an accounting correction. If posting that correction violates appropriations as to amount, an ADA violation will have occurred as well. Statutory ceilings may also be a basis for an ADA violation. b. "Involving the government in any contract or other obligation for the payment of money for any purpose in advance of appropriations made for such purpose, unless the contract or obligation is authorized by law" An obligation may be incurred only after Congress passes and the President enacts (signs) the appropriation bill. c. "Accepting voluntary services for the United States, or employing personal services in excess of that authorized by law, except in cases of emergency involving the safety of human life or the protection of property"; and According to OGC, the voluntary services prohibition does not apply when a non-Federal party agrees in writing not to submit a claim for compensation to the Government for actions taken under a "gratuitous" service agreement. B-204326 (July 26, 1982); B-302811 (July 12, 2004) d. "Making obligations or expenditures in excess of an apportionment or reapportionment, or in excess of the amount permitted by agency regulations" (promulgated under 31 U.S.C. 1514). Apportionment totals and apportionment categories, as well as any conditions on the use of funds, are also a basis for Antideficiency Act violations. Additionally, if more funds have been obligated than legally available, deobligating or receiving new quarterly funding does not eliminate the need to report the violation. Failure to post an obligation to an agency's financial system when incurred, or delaying this posting, cannot prevent a violation. 95 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Reporting Violations In accordance with the instructions and examples contained in OMB Circular A-11 (Part 4) (formerly OMB Circular A-34), the steps for handling potential and actual Antideficiency Act violations are as follows: a. Any EPA employee is required to notify the Agency Allotment Holder (Office of Budget Director) upon learning of an apparent violation. Verbal notification should immediately be followed up with a written detailed description of the apparent violation. b. The Chief Financial Officer (CFO) and the Office of Budget Director (Agency Allotment Holder) must ascertain whether or not a violation exists. This determination is generally achieved with the assistance of an Office of General Counsel (OGC) legal opinion. While reviewing, auditing, and examining authorities may detect violations, only the CFO and the Office of Budget Director (with the assistance of OGC) can make the actual determination. Once it is determined that a violation does exist, the Agency is required to report it immediately. c. At EPA, the Administrator reports ADA violations through the Director of the Office of Management and Budget, to the President, Congress, and the Comptroller General. The letter format for doing this is contained in OMB Circular A-11 (Part 4) (formerly OMB Circular A-34). d. The organization responsible for the violation must provide a comprehensive plan of action for preventing any future recurrence. This plan should be coordinated through the Office of Budget Director for recommendations and submitted to the EPA CFO. Penalties 31 U.S.C 1341 (a), 1342, and 1517(a) provides that an officer or employee of the U.S. Government violating the Antideficiency Act shall be subject to: a. suspension from duty without pay; or b. removal from office. In addition, the employee may be subject to "appropriate administrative discipline" including: a. a letter of reprimand for the official personnel record of the employee; b. an unsatisfactory performance rating; transfer to another position; An officer or employee of the U.S. government knowingly and willfully violating the Antideficiency Act shall face a criminal penalty of being "fined not more than $5,000, imprisoned for not more than 2 years, or both." 2. EPA Administrative Control of Funds Violations Any officer or employee of the Environmental Protection Agency has violated the OCFO's system of administrative control of funds if he or she: 96 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 a. authorizes or creates an obligation or makes an expenditure in excess of the amount permitted by the EPA's system of administrative funds control; b. makes allowances in excess of an apportionment pending the passage of appropriations; c. issues agency allowance in excess of the related apportionment, by quarter or total for the year; d. makes or authorizes an expenditure or creates or authorizes an obligation without authority; e. authorizes expenditures or an obligation under any appropriation or fund in excess of the amount available; f. involves the EPA in a contract or other obligation for the payment of money for any purpose in advance of appropriations made for such purposes, unless the contract or obligation is authorized by law; or g. accepts voluntary service for the United States or employs personal services in excess of the amount authorized by law, except in instances of emergency involving the safety of human life or the protection of property. For current funds, "amounts available" are equal to the lesser of apportionments, allocations, or budgetary resources available for obligation. For expired appropriations, "amounts available" include amounts available for restoration to the account. Violations occur when adjustments are made that cause obligations in expired appropriations that retain their fiscal year identity to exceed the apportionment for the year in which such obligations were required. B. OPERATING UNDER A CONTINUING RESOLUTION (CR) Congress sometimes does not pass an Appropriations Act before October 1 of the new fiscal year. Until Congress officially determines how much spending authority it will provide for the new fiscal year, it may pass a CR to allow agencies to continue operations until the budget is passed. OMB apportions the Continuing Resolution with an automatic apportionment bulletin. The bulletin will state the rate that expenditures may be incurred under the CR. Under a CR, the Office of Budget provides guidance to each AH stating the level/rate of expenditures which the Allowance Holder may incur by Appropriation/Allowance. This guidance may include a temporary Advice of Allowance. AHs must restrain spending during aCRto ensure that EPA does not violate Congressional limitations or OMB limitations. If Congress does not pass the budget by October 1, or vote on a CR, EPA issues orders regarding possible shutdown of all non-essential operations. See EPA Order 1000.26A entitled: EPA CONTINGENCY PLAN FOR THE SHUTDOWN OF THE AGENCY DUE TO A FUNDING HIATUS for more detailed information on shutdown. This order can be viewed on-line at intranet URL address: http://intranet.epa.qov/rmpolicv/ads/orders/1 OOP 26a.pdf C. PAYROLL MANAGEMENT and TRACKING/PEOPLE PLUS Since payroll is such a large expense at EPA, AHs/FCOs must monitor and control it carefully. Personnel, Compensation & Benefits (PC&B) costs must be continually reviewed and projected for the entire fiscal year. Necessary steps must be taken to ensure that costs remain within all approved limits. Further explanation of accounting for personnel charges is located in RMDS Chapter 2550A entitled Financial Management of Personnel. EPA has purchased PeoplePlus - an integrated management system for Human Resources, 97 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Benefits, Payroll, Time and Labor. Additional payroll guidance and instructions for the People Plus system and software will be distributed under separate cover through normal agency channels. 1. Payroll Accounting Obligations for monthly payroll costs are generated by the biweekly submission of time and attendance forms for all employees. After processing payroll for each pay period, actual PC&B costs are posted and an accrual for the remainder of the month is calculated based on the actual payroll data. PC&B actuals plus the remaining accrued balance of the month are displayed in the IFMS tables SASP or SAIN under budget object class Code 10 (PC&B). Both actuals and accruals are displayed as disbursed in the Expended Amount field. Each employee has one or more standard fixed account numbers (FAN) to which all payroll expenses for the employee are normally charged. The fixed account number(s) corresponds to the program results code that supports employee work years and personnel costs. It shows whether an employee is paid with management and support funds, or from environmental program funds. It is important that the employee is assigned a fixed account number (or numbers) that corresponds to the work the employee actually performs so that expenditures for specific environmental programs or activities are accurately reported. As each pay period ends, some or all of the employee's payroll expense can be charged to account numbers other than their FAN, if appropriate. Consequently, payroll accruals could be inaccurate if employees had any unusual payroll distributions to other account codes during the last previous pay period. 2. Split-funding Payroll Costs As noted above, program offices may charge an employee's payroll costs to more than one account. This can be done through direct charging as needed or by an established methodology. No documentation or approval is needed to direct charge. However, in order to use a methodology, written documentation must be submitted to the SFO at the beginning of each fiscal yearwhich shows how the different percentages of the appropriations benefiting are to be charged throughout the fiscal year. Specific names of the employees, their social security numbers, and their FAN ARE NOT needed in the documentation. Of course, only appropriations available for PC&B may be used in split-funding payroll costs. 3. Calculating (Full Time Equivalent) FTE Usage An "FTE" or "work year" is the number of compensable hours that an employee working full time would work in a given year. A work year has either 2,080 2,088, or 2096 compensable hours based on the calendar year and the total to be used is published annually in OMB Circular A-11. To calculate FTE usage, compute the total number of hours worked in an organization, including holidays, leave, co-ops, and stay-in-school hours. Divide this number of hours by the compensable hours in the fiscal year to find the FTE usage to date. Dividing this FTE usage by the FTE ceiling gives percent usage. This fraction should be about the same as the fraction of the year that has passed. On March 31st, for example, 50 percent of the fiscal year has passed, so you should find 50 percent of the FTE ceiling used. If FTE usage is too high or low, the Allowance Holder should discuss this with the SBO, for possible redistribution of FTE ceiling or other action as necessary. 98 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 D. WORKING CAPITAL FUND SERVICES EPA's Headquarters & Regional Offices procure certain general administrative services through the Agency's Working Capital Fund (WCF), as authorized by EPA's 1997 Appropriation Act and Section 403 of Public Law 103-356, the Government Management Reform Act (GMRA). EPA Order 2570.1 identifies the WCF overarching authorities and policies. 1. WCF Service Agreement (SA) The WCF SA is comprised of two parts: 1) WCF Order Form, which identifies the quantity of services ordered by the customer, and 2) WCF Funding/Requisition Form which provides the accounting information to pay forthe services ordered. The WCF Funding/Requisition Form is organized so that customers use a unique DCN for each service agreement. This allows for customers to readily obtain financial information on each service from the Agency's IFMS. The SA contains information on the types of services needed by the customer for a fiscal year, and is approved and signed at the appropriate Allowance Holder/Responsibility Center (AH/RC) level, as determined by each Senior Resource Official (SRO). The AH/RC may centrally fund services for an entire RPIO, AH, or at the AH/RC level. FCOs must sign each WCF Funding/Requisition Form to indicate that funds are available, committed, and appropriate forthe WCF services identified. 2. Committing and Obligating Funds There are three ways that customers can fund their WCF SA: 1) unexpiring two-year and/or no-year funds, 2) new funds, or 3) a combination of both. If customers include new funds, FCOs must ensure that a "Subject of Availability of Funds" statement is cited on the WCF Funding/Requisition Form. If a service or services are funded using multiple appropriations, FCOs must have a logical methodology to explain how each appropriation benefits from the services received. To commit funds for a WCF SA, FCOs should follow the same policies and procedures outlined in Chapter 3, Section III for committing funds in IFMS. Commitments on the WCF Funding/Requisition Form occur in EPA budget object class 38, using sub-object classes 2575 (programmatic) and 2576 (administrative). See the following section (I) of this chapter titled, "Administrative v. Programmatic" Philosophy, for clarification of what constitutes an administrative or programmatic cost. After funds have been committed in IFMS, the FCO provides the IFMS REQL screens as part of the WCF SA package to confirm the commitment and reservation of funds in IFMS. FCOs must ensure that REQL screens match the "lines of accounting" on the WCF Funding/Requisition Forms. Offices should also establish a separate WCF SA for each Capital Planning and Investment Control (CPIC) system. The WCF Activity Manager acts as an obligating official and is authorized to obligate funds committed by Agency offices. An obligation occurs when the WCF Activity Manager signs the WCF Funding/Requisition Form. The WCF SA, signed by both the customer and WCF Activity, is forwarded to the RTP-FMC for posting the obligation in IFMS. The WCF Activity provides a signed copy of the WCF Funding/Requisition Form to the customer. It contains the assigned SA number which is the customer's Obligation Document Number (ODN) in IFMS. As noted in Chapters, section ING, if an FCO decides to decommit or cancel funds which have been committed, the FCO must notify the WCF Activity Manager, who is authorized to approve the deobligation of funds. For WCF SAs, the FCO notifies the WCF Activity Manager of the intent and 99 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 rationale to decommit the funds. Funds will not be decommitted unless there is a mutual agreement between the customer and the WCF Activity Manager. 3. Monitoring Disbursements Consistent with the WCF SA, the WCF Activity earns "revenue" from the delivery of WCF services to customers, and provides monthly Billing Statements to the customers. Upon receipt of the Billing Statements, customers are responsible for analyzing the reports and monitoring funds expended/disbursed for services delivered. This monthly monitoring is conducted by the WCF SA originator and the FCO. FCOs should use FDWdata and reports to assist in monitoring WCF funds. By monitoring year-to- date disbursements against funds obligated for each WCF service, customers can determine if the service quantity ordered (units) should be increased or decreased with respect to the original SA. FCOs may also monitor their monthly disbursements against their WCF SAs by using reports available in e-Business located on the Agency's Intranet at - http://cfint.rtpnc.epa.gov/otop/business/FY2007info.cfm For FY2008, use the same web site, and simply substitute FY2008 as the fiscal year. 4. Modifying WCF Service Agreements (SA) A WCF SA modification can be initiated by a customer at any time during the FY. A modification is required for additional funds to be added, or surplus funds to be removed from the original WCF SA. FCOs must use the original DCN assigned to the WCF service to be modified (refer to the original WCF Funding/Requisition Form). Additionally, FCOs must maintain the same sequencing of accounting information as referenced using the WCF Requisition Line numbers from the original WCF Funding/Requisition Form. If additional "lines of accounting" are required representing additional sources of funds, the next available WCF Requisition Line number should be used. If higher service levels are required, FCOs should increase funds using a WCF SA modification request. Likewise, if service quantities should decrease, FCOs should request a deobligation of funds from the WCF Activity Manager. The actual deobligation, once agreed to by the obligating official (WCF Activity manager), is actually accomplished by RTP-FMC. Prior to initiating a request for deobligation, FCOs must ensure that sufficient funds remain available, or unliquidated, to pay remaining bills for the service for the remainder of the FY. Using the customer's WCF SA number (ODN), the FCO should access the IFMS OBLL table that shows the amount of funds obligated and expended against the DCN/ODN for the service, using the MO transaction code. FCOs must attach IFMS OBLL screens (date stamped to indicate when the table was printed) for all WCF SA modification requests involving the deobligation of funds for WCF services. Once the FY is over, customers may request a deobligation of any excess or remaining unexpiring funds from their WCF SA by initiating an FY closeout modification. To request a deobligation of funds, customers should follow the end-of-year closeout procedures issued annually from OFM. Once the FY closeout modification has been accepted by the WCF Activity manager, associated funds will be deobligated by the RTP-FMC. Customers may use these funds for their new FY WCF SA, or request a reprogramming into other budget object classes to spend the funds, as needed. 100 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 E. U.S. GOVERNMENT PURCHASE CARD PROGRAM EPA originally implemented the U.S. Government purchase card program in 1987. The purchase card is the preferred method to purchase and pay for micro-purchases (currently stated as less than $3,000) in accordance with Federal Acquisition Regulations (FAR). The use of the purchase card expedites the acquisition of essential supplies and services, streamlines payment procedures, and reduces the administrative costs associated with traditional paper-based payment methods. The EPA purchase card program operates in a manner similar to any standard commercial credit card system, except that there are additional controls and limitations for Government purchases. Cardholders and Approving Officials (AOs) are advised that U.S. Government purchase cards are for OFFICIAL USE ONLY AND ARE NOT AUTHORIZED FOR PERSONAL USE, IDENTIFICATION PURPOSES, OR OTHER NONOFFICIAL BUSINESS PURPOSES. CARDHOLDERS SHALL NOT LOAN OUT THEIR CARD. Cardholders will be held personally responsible for any unauthorized use of the card. The Office of Acquisition Management (OAM), the primary Agency office forthe Agency's Purchase Card program, lays out specific policy and procedures in Chapter 13 of the Agency's Contract Management Manual, Section 13.3 Using the Government-wide Commercial Purchase Card which can be found at: http://purchasecard.epa.gov/files/Purchase Card Policv2006.pdf. The OCFO Purchase Card website can be found at: http://intranet.epa.qov/ocfo/finservices/ccard.htm The following portions are excerpted from the EPA Guidelines for Use of the U.S. Government Purchase Cards because they are of particular importance with regards to funds control. General Information The Cincinnati Financial Management Center (C-FMC) is responsible for processing the Agency's purchase card payments to the contractor bank. The C-FMC processes and certifies a daily payment to the bank. They also serve as the Agency liaison working with the bank for payment, dispute resolution and monthly reconciliation. Analyses on purchase card transactions are performed to detect and resolve funding problems and provide appropriate corrective measures to cardholders and finance personnel. It is the FCO's responsibility to certify the availability of funds. As noted in Chapters, Section IIIA6-the FCO should also verify that the correct signatures are in place, since some Bankcard transactions may also require a Contracting Officer's signature too. The FCO must ensure that the financial transaction is compliant with Agency financial policy and procedures and that all accounting data is accurate and complete. The FCO will enter the commitment into the Integrated Financial Management System by assigning a document control number (DCN) to each individual purchase card transaction. Alternatively, the FCO may provide cardholders with a default DCN for all purchase card transactions throughout the entire fiscal year. These options are discussed further in the "Purchase Card Funding Options and the FCO" section (see page 102). The FCO should maintain the proper documentation for internal control purposes. The FCO shall review all purchase card transactions at least monthly to ensure that all transactions are properly cost allocated to initiate and/or provide assistance as needed, and to provide an opportunity for the FCOtodecommitany unused funds. Typically, every Agency purchase cardholder shall establish and maintain an official log which includes a record of every transaction completed. The log may be in written or electronic form. However, it must be a separate and discreet document, and it must be an orderly, legible accounting of all purchase card transactions made by the individual cardholder. 101 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 The requirement of needing EPA Form 1900-8, "Purchase Request/Order" is no longer required for internal Purchase Card transaction processing since there is some duplication with the Purchase Card log. The decision on using the form should be a local option for each individual office. However, for detailed signature and documentation record keeping purposes, offices should consider continue use of the form. 1) Every cardholder shall have a log that shows every transaction completed bythat cardholder. 2) The official cardholder log shall be kept on a fiscal year basis and shall be maintained on a 30 day billing cycle. (The EPA Purchase Card begins on the 28th day of each month and ends on the 27th day of the following month. The EPA Fleet Card billing cycle begins on the 24th day of each month and ends on the 23rd day of the following month.) 3) At a minimum, the log shall contain a brief description of the items/services ordered, the vendor or merchant used, the date of the order, the total cost, the date the item was received/signed for by a 3 rd party, and the date of payment (also referred to as the EPA cost allocation). 4) In addition to the log, there may be other forms of supporting information necessary to fully document the order. These items shall also be maintained either in paper or electronic form in such a manner that they are physically with the respective log entry or can be easily merged and/or reconciled with the corresponding order. Examples of such supporting documentation are as follows: a. Vendor/merchant receipts or confirmations associated with the orders; b. Vendor invoices (if provided); c. Documentation of required prior approvals; d. Memoranda forthe Record (MFR) documenting any problems or unusual circumstances surrounding an order, and; e. Verification of receipt by independent 3rd party. 5) The log needs to include any additional documentation required by organizational or local procedures, or as required by the purchase cardholder orthe Approving Official (AO). As with all acquisition records, the cardholder's log and all supporting documentation shall be retained in the immediate office fora period of at least three years after the end of the fiscal year in which the transaction was completed. Purchase Card Funding Options and the FCO The following sections give the FCO information on the two options available to set up commitments for the cardholders to use in cost allocating transactions through EPA's Intranet Purchase Card Cost Allocation System. The option used is entirely dependent upon local procedures and/or arrangements established between the FCO and the cardholder. For further information on these options, as well as visual examples, see Paragraph K in Chapter 13, Section 13.3.5.2 of OAM's Contract Management Manual and the website mentioned at the beginning of this section. OAM's Purchase Card Team also provides a very helpful on-line refresher training site located at: http://purchasecard.epa.qov/node/77 1. Default Purchase Card Commitment This option allows the FCO to establish a base commitment by assigning a default document control number (DCN) that cardholders can use the entire fiscal year. The commitment is recorded by the FCO in the Integrated Financial Management System (IFMS) under Object Class (OC) 2620. When funding splits for appropriations and/or Program Result Codes (PRCs) are necessary, multiple lines of 102 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 accounting must be recorded at the ratio that will be used for the cardholder's purchase. Up to ten lines of accounting can be recorded against a DCN to accommodate this split. NORMALLY, THIS COMMITMENT IS $100.00. When cardholders approve a purchase in the EPA system (Purchase Card Allocation Page), they will enter the default DCN and select the correct OC, from the dropdown menu, forthat purchase. New commitment line(s) will be created with the selected OC. All allocations processed with the OC 2620 commitment may be entered with a Site Project Value for Superfund or IT Cost Tracking. The generic IT Site Project Value is provided if needed and may be changed. The original commitment against OC 2620 will remain the same in line 001 of IFMS. 2 Single Purchase Card Commitment This option allows the FCO to establish individual DCNs, for each purchase card order using the appropriate OC. When funding splits for appropriations and/or program result codes (PRCs) are necessary, multiple lines of accounting must be recorded at the ratio that will be used for the cardholder's purchase. When the cardholder cost allocates a transaction, each commitment line will be reduced accordingly. It is important for the cardholder to select the assigned OC forthat DCN. However, if the cardholder selects an OC that does not match the original commitment, that OC will be ignored since the commitment has been previously established. If a transaction is cost allocated using 98% or more of the commitment, the remaining balance will be liquidated. If the final transaction amount exceeds the commitment by more than $100 or 10%, the transaction will not process. The cardholder will receive an email from the CFC notifying them that the transaction has been reset for cost allocation. It's the cardholder's responsibility to contact the FCO to make the necessary correction. If the default DCN funding option will be used, the FCO must inform the cardholder of the default DCN and BOC to select for their purchase card transactions. If a single purchase card commitment is selected, the FCO must establish a procedure to inform the cardholder of the DCN assigned for each purchase. Cardholders must have this information before they begin to allocate the purchase in the system at: http://oasint.rtpnc.epa.gov/fmc2/card.card welcome Obligation Processing On a daily basis, Cincinnati-FMC compiles a list of all completed transactions cost allocated on the EPA website, and those transactions approved through the allocation site. From this data, C-FMC creates the obligation lines for input into the EPA Integrated Financial Management System (IFMS). The transaction will be divided among the obligation lines in the same ratio as the commitment. In cases where there are multiple funding lines, the obligation amount will equal the amount of the purchase as provided by the cardholder in the EPA cost allocation system. The obligation document number will consist of the last two digits of the fiscal year, the two character letters >BK=, and a 6 digit sequential number. Payment Processing During the creation of obligation documents, payment documents are also created. The payment amount will be the same as the obligated amount and the obligation document will be closed. This procedure will eliminate the need to perform the unliquidated obligation review for purchase card transactions since the obligation and payment amounts will be equal. The C-FMC reviews, certifies and processes a daily payment to the contractor bank. As soon as the goods or services have been received and accepted, the cardholder must cost allocate immediately. EPA makes daily payments to the contractor bank using the Agency cost allocation system information, and earns cash rebates for expedited payments. The cardholder will receive an electronic notification that states:"The cardholders and Approving Officials receive email notifications of charges received on their card and those pending allocation." For additional information on obtaining Approval Official Transaction Reports see http://purchasecard.epa.goV/node/6 103 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Reconciliation EPA has developed an Intranet web-based purchase card transaction review page that electronically captures all purchase card transactions. The purchase card transaction review page is available to the purchase card community to perform oversight of cardholders' transactions. Cardholders, FCOs, and AOs can review the activity of each cardholder over a chosen time frame to ensure the cardholder has correctly reconciled the funding for transactions and cost allocated them. FCOs and AOs have access to valuable transaction data to help facilitate budget decisions and identify problems with cardholder purchasing activity. Since all activity is captured on this page, detailed reports are available on purchase card transactions. Agency Rebate from Contractor Bank The Agency receives a quarterly rebate check from the contractor bank. The dollar amount of the rebate is calculated on points earned. The faster the cardholder cost allocates, the faster the Agency pays and the more base points the Agency earns. Once the rebate check is received, the CFC identifies purchase card payments by the Cardholder's organization, either NPM or Region. The rebate is then distributed based on the organization's ratio of purchases at the beginning of each quarter. Funds Control Officer (FCO) Requirements FCO's need to decide the method their office will use to account for the purchases and payments. If option one is selected the FCO must create a commitment in IFMS and let the cardholder know which commitment to use for their purchase card transactions. If option two is selected, the FCO's must work with the cardholders to establish a procedure to inform the cardholder which DCN to use for each purchase before the cardholder begins to input the accounting data for the purchase payment on the allocation page. Responsibilities of Funds Control Officer FCOs have specific responsibilities associated with the use of Purchase Cards in their program offices. First, the FCO must ensure that what is being procured is not a restricted item for Purchase Card purchases. A great deal of this information is covered on the on-line purchase card refresher training course located at http://purchasecard.epa.gov/node/77 and a list of Frequently Asked Questions (FAQs) that pertain to certain purchases: http://purchasecard.epa.goV/node/4 Prohibited Purchases The U.S. Government Purchase Card program was developed to be as nonrestrictive as possible; however, contractual terms, procurement policy and regulations require that certain restrictions be imposed. The following is the list of items/services that are restricted for purchase by all cardholders (including purchasing agents), and therefore, may not be acquired using the Purchase Card: Personal use supplies/services (items not necessary for EPA work). Personal services (employer/employee relationship) Purchase of individual meals, drinks, and rooms at hotels or motels for lodging, or any other employee travel-related expenses (use EPA approved travel credit card for this purpose.) Purchase of any form of unauthorized entertainment. Purchase of shirts, jackets and other items of clothing with or without the EPA or a program office logo unless the purchase is specifically authorized under Agency policies governing purchases of clothing (EPA Order 4800.1) or non-monetary awards (3130 A2 Recognition Policy and Procedures Manual) Purchase of gasoline or oil for government owned vehicles (use EPA approved fleet management cards for these purchases.) Cash advances (use EPA travel card) Purchase of airline, bus, boat, or train tickets (use EPA travel card). 104 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Employee rental or lease of motor vehicles, land, or buildings of any type. Long term rental and maintenance agreements. Construction, alteration or repair of public buildings. For a more complete list and additional guidance see Section 13.3.5.4 of the Contracts Management Manual, Purchase Card Prohibitions, Restrictions, and Priority Use of Sources located at - http://purchasecard.epa.gov/files/Purchase Card Policy2006.pdf. According to OGC, the purchase card may be used to purchase meals, light refreshments, and to rent space in hotels for training conferences as authorized "necessary expense" under EPA policies implementing the Government Employees Training Act. The purchase card may also be used to purchase lodging and meals for groups of EPA employees on travel provided the purchase is financed with travel funds. In addition, the purchase card may be used to acquire non-monetary award objects (e.g. plaques, pen and pencil sets) consisting of $75.00 or less, entertainment and light refreshments at official EPA awards ceremonies to recognize the achievements of Federal employees as authorized by the Government Employees Incentive Award Act. For information on when EPA may use appropriated funds to purchase food see EPA Order 1900.3 Food at an EPA Conference, Workshop, Ceremony, Reception or Observance. See also 5 U.S.C. 4501.06 Record Keeping Cardholders must maintain the following records: a. Delegation of Procurement Authority or certificate of appointment (SF1402) retained in permanent file or prominently displayed at work location. b. A copy of the Purchase Card log for each 30-day billing cycle. The cardholder records each purchase made during the 30-day billing cycle on this log. c. The cardholder must maintain their Statements of Account (along with all original documentation) for at least 3 years (FAR 4.805(b)). As with all acquisition records, Purchase Card logs and all supporting documentation shall be retained for a period of at least 3 years after the end of the fiscal year in which the transaction was completed. F. ORDERING GSA OFFICE SUPPLIES Effective September 30,2004, EPA's Corporate Express Blanket Purchase Agreement (BPA) became the mandatory mechanism for ordering all office supplies. See OAM's web pages: 1. http://epawww.epa.gov/oamintra/hpod/bpagen.pdf on BPAs, and/or Simple Acquisitions Made Easy (SAME) 2. http://epawww.epa.gov/oamintra/policy/sacq.pdf and 3. http://purchasecard.epa.gov/ for additional information. At Headquarters, employees purchase supplies by ordering from a GSA catalog that includes complete descriptions and pictures of every item. Although offices may use their Purchase Card to order supplies, GSA uses a more streamlined billing process by encouraging offices to use "Activity Address Codes" that are managed through the Cincinnati-FMC. The following steps briefly describes how the program works: 1. Program offices identify the individuals they want to be authorized to order supplies and complete GSA Form 3525 to "register" authorized buyers with the GSA Customer Supply Center (CSC). 105 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 2. EPA's property management staff assign Activity Address Codes to each Responsibility Center staff, and access codes are assigned to each person authorized to order supplies (the access code tells GSA where to deliver the supply order). GSA catalogs are then given to authorized personnel. 3. Program offices submit EPA Form 2550-10 (Miscellaneous Obligation Document) to Cincinnati to establish beginning balances in each account (similar to the Purchase Card program). 4. Authorized buyers contact a CSC by phone, fax, or Internet to place their order. 5. The CSC will send the order an itemized receipt to the customer the next day and invoices to Cincinnati twice a month. Emergency orders can be placed and picked up the same day. 6. Cincinnati-FMC receives and pays bills and sends transaction reports to each Responsibility Center once a month. Since the GSA charges will result in a debit to the program office's resources, it is important for the FCO to keep track of the expenditures as they are incurred. A log, record book, or spreadsheet should be maintained for each GSA purchase showing supplies purchased, the costs, and the date the purchases were made. The buyer should complete the ordering forms before requesting FCO approval in order for the FCO to certify that funds are available for the expenditure. As noted in step #5, the customer receives the receipts for the purchases. The FCO should always be sure to get the receipt (or a copy) back from the buyer, since it will be important in reconciling any accounting errors with Cincinnati-FMC, as well as in receiving proper credit if items need to be returned to the CSC. G. "ADMINISTRATIVE" vs. "PROGRAMMATIC" 1. Philosophy The concept of costs being either "administrative" or "programmatic" is a functional distinction based on purpose. In FY1994, to implement restructured appropriations and to control costs as being either administrative or programmatic, the Agency revised its budget object class and finance sub-object class coding to reflect this philosophy. As of FY 2004, we continue to track administrative and programmatic costs from obligation data. The purpose for which funds are obligated can generally be described as being either "administrative" or "programmatic". Please note that whether a particular obligation is administrative or programmatic is determined by what is being bought and the purpose forwhich it is acquired, not by who is buying it or by which organization they are employed. Please read the entire philosophy and the examples to acquire a clear understanding of the distinctions being drawn. Individual portions of this section, taken out of context, do not provide sufficient guidance. Administrative Costs are: a. staff-related - these costs include items for groups of employees such as rent for staff space and consumable office supplies that would not be incurred if the Agency did not have a workforce. 106 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 b. support-related - including all of the Agency's major support contracts for general-use facilities, maintenance, etc. Also, includes costs associated with Program Office management staff activities, administration and management. c. individual-related - includes personal desk-top office equipment and includes general staff training (as opposed to technical program-specific training) that provides knowledge that can be utilized by the employee upon leaving their present position. d. overhead-related - including management and administrative functions that all government and business organizations have and which are not related to environmental programs. Programmatic Costs are: a. environmental mission-related - these costs are specifically driven by environmental statute and program activities rather than the in-house office staff involved with the programs. Regulation development and water quality monitoring activities are examples of costs that are mission-related. b. acquisition or assistance-related - include items historically termed as "extramural" which are directly related to activities outlined by environmental statute and are traditionally obligated through contracts/IAGs or grants/cooperative agreements. c. field-related - include program activities such as hazardous waste clean-up, environmental emergencies, field sampling and testing & monitoring, etc. d. special-use facility-related - infrastructure operating costs (rent, utilities, etc.) associated with dedicated single-purpose special use facilities including the Regional ESD labs and the others listed in Section 2A. e. unique and limited use-related - includes cost of items with limited application or unique use for specific programs that have no general use elsewhere. Examples would include weapons and ammunition unique to enforcement work and cost recovery data collection & enforcement efforts unique to Superfund The APPLICATION OF THE ADMINISTRATIVE VS PROGRAMMATIC PHILOSOPHY TO SOME SPECIFIC AREAS FOLLOWS: a. Appropriation Layoffs With the exception of Superfund Information Technology (IT), layoffs between appropriations must be moved against the same accounting sub-object classes in both appropriations. No layoffs are permitted between administrative and programmatic object classes except for Superfund IT. IT Cost Layoff/Methodology - EPA and the Appropriation Committees have agreed that a percentage of Superfund IT timeshare contract costs could be charged as programmatic. Under the revised definition, a methodology may be used to allocate an appropriate amount of IT timeshare costs to programmatic contracts. Several options for methodologies are being examined, including percentages of mainframe computer CPU hours used to support Program Office database systems, as well as percentages of administrative vs. programmatic application systems. 107 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 For appropriations other than Superfund, it will still be necessary to separate obligations into identifiable units that can be determined, justified and direct charged as either 100% administrative or 100% programmatic. Restated, other than for Superfund, obligations that cannot be segregated, justified, and directly charged to a programmatic object class will still have to be charged to an administrative object class. b. Training & Training Materials EPA and the Congressional appropriations committees have agreed that scientific, technical and program specific costs of training and training materials are programmatic. All other training is administrative. This determination is to be made on a course by course basis. For example, the OHROS Core Curriculum Training Program is itself neither administrative nor programmatic. The specific nature of the course being offered determines whether the cost is administrative or programmatic, not the training program and not the position or employing office of the individual receiving the training. Programmatic training must be for the benefit of the Agency, not the employee's career development, and be program-specific to the extent that the knowledge or skills would not be useful elsewhere in the Agency or the U.S. Government. In general, there should be very little programmatic training within administrative organizations (e.g., OARM, OCFO, OGC, OIG, AO). Even within Program Offices, the designation of training as programmatic must be selective and be a unique requirement because of employment at EPA. Programmatic sub-object classes 25.02, 25.59, and 25.61 are appropriate for such instances. c. Printing of Public Information EPA and the Committees have agreed that the cost of printing environmental materials for public awareness (to publicize EPA and its programs) to be part of the Agency's operating costs, and therefore, administrative. Programmatic printing would encompass scientific and technical reports and documents and program-specific material intended to generate or direct environmental action (such as materials to promote recycling). Sub-object classes 24.11 and 24.13 are available for appropriate programmatic printing costs. d. Field Activities EPA and the Congressional appropriations committees have agreed that items unique to program activities in the field may be charged to programmatic sub-object classes. For example, in the area of Criminal Investigator enforcement activities, programmatic costs would include such items as: guns, ammunition, specially equipped vehicles and boats, local/State police data lines, surveillance equipment, and other such items that have a use limited to the enforcement program. Conversely, passenger cars, fuel, and parking space leases; car phones and paging service, etc. are to be charged to administrative sub-object classes as items that are not unique to enforcement work. Other field activities, aside from Criminal Investigation, can be funded similarly by applying the same criteria to determine whether costs are administrative or programmatic. This would include items unique to Superfund removal and cleanup activities, etc. e. Specifically Funded Items Except for PC&B and Travel which are always administrative, trackable items such as Congressional Add-ons which are issued to the Allowance Holders through specially coded allowances are provided only in programmatic budget object classes. Because Congress did not 108 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 provide additional Operating Expenses Ceilings to cover these items, we are unable to issue sufficient ceiling to cover what would otherwise be purely administrative expenses that might be associated with these special projects. Consequently, all costs associated with Congressional Add-Ons should be charged to the proper programmatic sub-object classes unless other agreements have been reached with the Office of Budget (OB). f. Health and Safety Requirements Consistent with the basic definition of administrative expenses being those that are staff-related, most general occupational health and safety (H&S) costs for the purpose of protecting the welfare of the Agency's employees must be funded as Administrative. This includes such costs as: development and implementation of general safety plans and general safety training, compliance with government-wide H&S requirements (e.g., OSHA), maintenance of health records, health unit employee physicals, wellness program activities, etc. Health and safety costs that are an integral part of the Agency's environmental mission are programmatic costs. This includes such costs as: program-specific risk-related Health & Safety activities (e.g., medical monitoring, and protective equipment, clothing, training and certification), industrial inspections by EPA, development of environmental H&S guidelines, H&S standards development, and environmental compliance costs such as collaboration with Program Offices in the development of model programs, techniques, and protocols. Also, Safety, Health and Environmental audits (program evaluations) at approved, dedicated special-use facilities are considered to be programmatic costs. OARM Programmatic Costs The Committees have stated that "all elements identified in the management and support section of the agency's Congressional budget justification (CJ) should be included under the Operating Expenses Ceiling". Because grants, programmatic expenses and programmatic contracts are excluded from the ceiling, some specific OARM costs may be classified as programmatic costs. Examples are: Approved Special-Use Facility Infrastructure Costs which are Paid by OARM IT Costs Directly Supporting Programmatic Offices (Including Programmatic Databases such as: Storet, Hazardous Waste.DMS, New Air Data System, Docket System, Pesticides Product Information System, etc.) • State/EPA Data Management Programmatic Costs • Environmental Equity Programmatic Costs • Approved Programmatic Health & Safety Activities • Environmental Financing Programmatic Costs h. QIC Programmatic Costs The Congressional appropriation committees have indicated that they do not consider the OIG account to be 100% administrative. The Agency has agreed to track its administrative expenses 109 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 in this account using the "global" definition for expense categories developed for the other EPA appropriations. Based on an earlier agreement between EPA and the Congressional appropriations committees, the OIG has formulated its Operating Plan (OP Plan) based on target percentages of approximately 83% administrative and 17% programmatic and they have produced the following list of programmatic activities that center around their grant and Superfund activities. However, since there is no legal limitation, the OIG is free to reprogram as necessary between administrative and programmatic budget object classes. Programmatic activities include: • audit of all payments, obligations, reimbursements or other uses of the Superfund Trust Fund; • audit of Superfund claims; • examination of a sample of agreements with State carrying out response actions; • examination of remedial investigations and feasibility studies; • audit of Construction Grant Program; and • pre-award and other audit assistance needed to award contracts. i. Abuses of the Programmatic Designation A number of concerns were expressed about potential abuse in opening the Rent, Communications & Utilities (23.00 object class series) to programmatic cost charging. These object classes were established not only to accommodate the special-use facility arrangements but to provide for the lease/rental of the same equipment and facilities that had been categorized as programmatic when purchased outright in other sub-object class series (26.00, 31.00). With regard to abuses, the programmatic designation of charges will be subject to Congressional reporting as well as OIG and GAO audits. If an Agency official knowingly and willfully causes a statutory ceiling to be exceeded, the violator may be subject to fine and/or imprisonment under the Antideficiency Act or administrative sanctions. All offices are cautioned to be conservative and ensure adequate justification is available to support programmatic cost designations. 2. Special Use Facilities Beginning in FY 1993, based upon precedent established by NASA, the Committees permitted the classification of operating infrastructure costs for certain approved, dedicated, special-use facilities as being exclusively programmatic. Infrastructure costs include: rent, utilities, communications, and land and structure modification costs, etc. This will allow EPA to exclude those facility costs from any administrative and operating expense ceilings. Infrastructure costs at other than special-use facilities are administrative and are under the expenses ceilings. A list of EPA approved special-use facilities follows. These facilities will be permitted to charge the programmatic sub-object classes in each object classification series for their operating infrastructure costs. These costs can be charged to programmatic sub-object classes regardless of whether the costs are obligated by the Region, the HQ Program Office, or by OARM. If the special-use facility is co-located within or a part of other facilities, the costs can be charged programmatically provided they can be determined and justified. To propose a location as a dedicated, special-use facility, please 110 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 send the Office of Budget a written request with justification. Approval by the Committees will be required. Purely administrative costs at special-use facilities (non- infrastructure costs, such as office supplies, etc.), would still be charged to the appropriate administrative sub-object classes and require administrative expenses ceiling. Conqressionally Approved and Dedicated Special-Use Facilities ESD Regional labs Montgomery, AL facility (OAR) Radiation and Indoor Environments National Laboratory (OAR) Ann Arbor, Ml facility Bay St. Louis, MS (OPPTS) Beltsville, MD (OPPTS) NEIC in Denver (OECA) EPA Research Vessel "R/V Lake Guardian" (OW) EPA Research Vessel "OSV Peter W. Anderson" (OW) National Enforcement Training Institute (NETI) (OECA) Exposure Research Lab - EPA/RTP Campus, RTP, NC Human Exposure & Atmospheric Sciences Division (ORD) Atmospheric Modeling Division (ORD) Exposure Research Lab - Fluid Modeling Facility, RTP, NC Atmospheric Modeling Division (ORD) Exposure Research Lab - Human Exposure & Atmospheric Sciences Division (ORD) Environmental Sciences Division (ORD) Exposure Research Lab - Cincinnati, OH Ecological Exposure Research Division (ORD) Microbiological & Chemical Exposure Assessment Division (ORD) Exposure Research Lab - Las Vegas , NV Environmental Sciences Division (ORD) Exposure Research Lab - Athens, GA Ecosystems Research Division (ORD) Health and Environmental Effects Research Lab - EPA/RTP Campus, RTP, NC Experimental Toxicology Division (ORD) 111 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Environmental Carcinogenesis Division (ORD) Neurotoxicology Division (ORD) Health and Environmental Effects Research Lab - Reproductive Toxicology Facility, RTF, NC Reproductive Toxicology Division (ORD) Health and Environmental Effects Laboratory Clinical Facility, Chapel Hill, NC Human Studies Division (ORD) Health and Environmental Effects Research Lab - Gulf Breeze, FL Gulf Ecology Division (ORD) Health and Environmental Effects Research Lab - Duluth, MN Mid-Continent Ecology Division (ORD) Health and Environmental Effects Research Lab - Grosse lie, Ml Mid-Continent Ecology Division (ORD) Health and Environmental Effects Research Lab - Corvallis, OR Western Ecology Division (ORD) Health and Environmental Effects Research Lab - Newport, OR Western Ecology Division (ORD) Health and Environmental Effects Research Lab - Narragansett, Rl Atlantic Ecology Division (ORD) Environmental Assessment Center- EPA/RTP Campus, RTF, NC Environmental Assessment Center (ORD) Environmental Assessment Center - CINN, OH Environmental Assessment Center (ORD) Risk Management Research Laboratory- CINN, OH Water Supply and Water Resources Division (ORD) Land Remediation & Pollution Control Division (ORD) Sustainable Technology Division (ORD) Air Pollution Prevention and Control Division (ORD) Risk Management Research Laboratory- Edison, NJ Water Supply and Water Resources Division (ORD) Risk Management Research Laboratory - Ada, OK Groundwater and Ecosystems Restoration Division (ORD) Infrastructure Costs at Special-Use Facilities In addition to items that are mission-related and can be designated as programmatic under the "Administrative vs. Programmatic" Philosophy, the following Infrastructure Costs, which are administrative at all other locations, can be charged to programmatic sub-object classes at approved, dedicated, Special-Use Facilities: 112 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Programmatic: Utilities: Electric/Heat/Staff Telephones Rent/Lease Technical Furniture/Equipment Including Maint. & Repairs Guard Services Groundskeeping Housekeeping/Janitorial Services Building Repairs & Maintenance Snow Removal Trash Removal/Carting Service Contract to Operate Parking Facility Hazardous Material (HAZMAT) Transport Service Fire Extinguisher/Equipment Health & Safety Monitoring of Facilities Administrative: Health Unit/Wellness Center Exercise Facility/Stress Lab Office Supplies Non-Technical Employee Training Non-Technical Furniture/Equipment (Office Furniture) including Maintenance & Repairs 3. Examples of the ADMINISTRATIVE vs. PROGRAMMATIC Philosophy These examples include but are NOT LIMITED to the following. 22.00 Series Transportation of Things Administrative: PCS Transfer of Effects Office Relocation Costs Trucks, Forklifts, etc. for Administrative Transportation of Things Transport Costs Between Facilities Surplus Property Relocation/Redistribution Programmatic: Shipment of Scientific Equipment, Samples, and Laboratory Animals Shipment of Hazardous Waste Materials Shipment of Possibly Toxic Soil & Water Samples Trucks, Forklifts, Aircraft, etc. for Mission-Related Transportation of Things Shipment of Program-related Exhibits Delivery of Programmatic Equipment to its Location of Use 23.00 Rent, Communications & Utilities Administrative: 113 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Messengers Courier Services HQ/Region Rental use of Land and Buildings HQ/Region Space Rental Paid to GSA HQ/Region Utilities HQ/Region General Purpose IT Data Facilities, Hardware, and Software Rental General Postage/Mail Programmatic: Special-Use Facility Rent Paid to GSA, Utilities, etc. Mission-Related IT Software and Hardware Rental Lease/Rent of Programmatic Equipment & Services Rental of Scientific Equipment Programmatic Postage/Mail 24.00 Series Printing & Reproduction Administrative: General Purpose Advertising Program Management Analyses Printing of Non Program-Specific Public Information Materials Administrative Federal Register Notices such as Grant Regulations Employee Information (e.g., Payroll, Retirement or Wellness Materials, Bulletins, and Newsletters) General Purpose Training Materials Requests for Proposals Congressional Testimony Public Relations Materials Generally Publicizing EPA and its Programs (e.g., EPA Journal, EPA's Approach and Progress; program overviews, directories and Annual Reports - unless Congressionally directed) Superfund Program Managers SCAP Manuals Programmatic: Mission-Related Advertising such as Public Notices of Hearings Programmatic Federal Register Requirements such as Notice of Rulemaking Proposed and Final Rules Reports Needed to Meet Congressional Requirements for Programmatic Decisionmaking Scientific: Reports, Newsletters, Program Fact Sheets, and Manuscripts Technical Documents (e.g., The Safe Drinking Water Act: A pocket guide to the requirements for the operators of small water systems, Wetlands Manual) Program Specific Material Intended to Generate or Direct Environmental Action by Readers such as: • Materials to Promote Recycling; • Lead and Your Drinking Water; • Affects of Suns Rays; • Targeting Indoor Air Pollution; and • other technical "How To" Guides (e.g., How To Reduce Radon Levels In Your Home) 114 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 25.00 Series Contracts/IAGs Administrative: Meeting and Conference Subsistence Auto Parking Contracts Management and Support Contracts/IAGs General Health and Safety Contracts/IAGs (e.g., Development and Implementation of General Safety Plans, Health Unit Physicals, and Wellness Program Activities) Personnel Security Investigations/Clearances Administrative and Management Consulting Services Employee Developmental and Rotational Assignments Program Management Conference Facilitators TQM Awareness Training Cost/Benefit Analysis Training Computer (and other general) Skills Training General Health & Safety Training (e.g., General Safety Practices and General Laboratory Safety Techniques) Operation of Health Facility lAGs General booth displays at Job Fairs, Car & Boat Shows, Earth Day Festivities, etc. Contracts for Facility Maintenance and Operations at other than Special-Use Facilities Programmatic: Mission-Related Public Databases/Hotlines Mission-Related Consulting Services On-Line Database Searches such as LEXIS and NEXIS Research Computer Literature Searches such as DIALOG, NTIS, STN and MEDLARS Program Contracts/IAGs Research Contracts/IAGs Scientific IT Contracts for Research Database Management Demonstration lAGs Laboratory Animal Care Contracts Research Library Operations Contracts at Special-Use Facilities Maintenance Contracts for Scientific/Technical Equipment & Repair Hazardous Waste Removal Contracts Expert Witnesses Scientific/Technical Booth Displays at Public/Technical Conferences Field Unit/Mobile Unit Superfund/LUST Contracts Contracts for Remedial Action, Remedial Design, or Removal Remedial Investigation & Feasibility Studies Contracts for Site Assessment and Clean-up Superfund Program Enforcement Contracts (such as: Oversight of Potentially Responsible Party (PRP) Cleanup, Superfund Compliance Monitoring, Cost Recovery Documentation (SCRIPTS), "Waste In" Liability Allocation Analysis, Enforcement Training, PRP Search Contracts Contracts for Facility Maintenance and Operations at Special-Use Facilities Special-Use Facility Occupational Health and Safety Requirements (Buildings Only) Program-Specific Risk-Related Health Monitoring Contracts/IAGs Program-Specific Risk-Related Health & Safety Training and Certification 115 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Combustion Engine Economy Training How to Write Permits Training Mass Spectrometer Equipment Training Emissions from Alternative Fuel Engines Training On-Site Coordinator Training Remedial Project Manager Training Environmental License Fees Site Response Management Contracts (such as: site cleanup guidance, cleanup prioritization, and site monitoring) 26.00 Series Supplies & Materials Administrative: Motor Pool Gasoline Office Supplies General Purpose Subscriptions Standard Office Reference Books such as Dictionaries, Thesaurus, etc. Informal non-monetary awards such as T-shirts, coffee cups, gift certificates, $75.00 U.S. Savings Bonds Programmatic: Test Fuel Mission-Related Subscriptions Scientific and Technical Laboratory Supplies Criminal Investigator Ammunition and Surveillance Supplies (such as Film) Program-Specific Risk-Related Protective Clothing and Supplies Subscriptions Supplies for Hazardous Waste Disposal Laboratory Animal Care Supplies 31.00 Series Equipment Administrative: Purchase of General Purpose IT Software Packages Copy Machines Fax Machines General Purpose Telephone Equipment for Staff Office Furniture Individual Desk-top Equipment (such as Calculators) Personal Computers or Other Word Processor Equipment for General Staff Use such as Local Area Network (LAN) Equipment) Car Phones Pagers/Beeper Equipment Personnel Classification and Directive Books Programmatic: Programmatic IT Software Packages such as: • toxic chemical composition analysis programs - LHASA, SYNGEN,CAMEO; 116 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 • chemical property estimation programs; and • CLOGP & PC GEMS; SAS & SAS-Graph software when used for generating research lab. data, etc.) (25.75 if WCF) Programmatic IT Software Disk Update (25.75 if WCF) Technical Books or Manuals Research Vessel Equipment Laboratory and Scientific Equipment Mission-Related Phones for Hotlines such as EPA Water Resource Center Criminal Investigator Guns, Surveillance Equipment Program-Specific Risk-Related Health & Safety Equipment Specially Equipped Vehicles for Law Enforcement/ Surveillance or Boats for Emergency Response. IT Equipment for Programmatic Databases such as: • STORET; • HazWst.DMS; • New Air Data System; • Docket System; • Pesticide Product Info. System; • CERCLIS. • Site & Field Protective Clothing 32.00 Series Land and Structures *** FOR USE WITH B & F APPROPRIATION ONLY *** HQ/Region Land, Buildings, & Structures Special-Use Facility Land, Buildings, & Structures 42.00 Series Insurance Claims/Indemnities Administrative: Insurance Claims & Indemnity Claims for Employees Insurance Claims & Indemnity Claims for Contractors Local, State, or Federal Fines or Claims Claims for Court Costs Involving EEO or other Hiring Practices litigation Programmatic: Pesticide Indemnification Payments Superfund Indemnifications Superfund Response Claims Court Costs such as: Equal Access to Justice Act, Claims for failed Enforcement Actions, failure to implement environmental statutes cases, improper issuance of regulations cases, etc. G. DIRECT IMPLEMENTATION of STATE and TRIBAL ENVIRONMENTAL PROGRAMS with STAG APPROPRIATIONS For some environmental programs, states and tribes have been delegated or authorized the primary responsibility to carry out and enforce such programs. In the absence of such state or tribal program, EPA may be legally required to carry out the program. For appropriation and grant purposes, this is called "direct implementation" by EPA. The NPDES program under the Clean Water Act and the Underground Injection Control (UIC) and the Public Water System Supervision (PWSS) programs underthe Safe Drinking Water Act are examples of direct implementation programs. Some of the continuing environmental program grants 117 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 authorized in the STAG appropriation provide funding for states and tribes to carry out these programs, EPA can use these funds to support direct implementation responsibilities. Regarding Tribes, there may be additional sources to fund EPA's direct implementation efforts. For example, although General Assistance Program (GAP) grants funded by the STAG Appropriation can be used by Tribes only to develop tribal capacity in programs, GAP funds could be used by EPA for "direct implementation" activities of all environmental programs (40 CFR 35.516 applies). One exception related to the use of STAG funds for "direct implementation" is that the funding for the Indian Set-Aside Programs cannot be used by EPA for this purpose. Authority for these programs is found in both the Clean Water Act (CWA) and Safe Drinking Water Act (SDWA) as well as the STAG appropriation language relating to the CWA and SDWA State Revolving Fund (SRF) programs. The funding for the set- aside programs, however, is not contained in the STAG lump-sum earmark for EPA's continuing environmental program grants (such as CWA 106 or SDWA PWSS), nor are the Indian set-aside grants programs which EPA is required to carry out in the absence of acceptable tribal programs. Thus, the set- aside grants are not "direct implementation" programs as defined in our appropriations process or grant regulations. EPA funds these programs from set-asides of the CWA and SDWA SRF funding and provides for these projects either through direct grants to tribes or interagency agreements (lAGs) with the Indian Health Service (IMS), which then makes the equivalent of a grant award to tribes for sewage treatment or drinking water facilities, as appropriate. This latter approach is authorized by EPA's statutory authority to work with other Federal agencies under sections 501 (b) of the CWA and 1450(b) of the SDWA. When using STAG funds for direct implementation activities of state or tribal environmental programs by the Regional Offices, funds will need to be reprogrammed from grants (BOC 41) into contracts (BOC 37) and/or expenses (BOC 36). Since these expenses are associated with program grants, using the programmatic sub- object classes in each series for costs associated with direct implementation will ensure that these costs will not be reflected as administrative costs. Because there are no travel funds appropriated in the STAG account, any direct implementation travel needs must be funded from within existing travel ceilings in the EPM account. OGC has opined that "boilerplate" report language for the EPM appropriation states that the EPM account contains "PCB" and Travel expenses for all media and programs of the Agency except SF, LUST, Oil Spills, and the OIG". Therefore, PCB or Travel for anything in STAG is paid out of EPM. Additionally, since any equipment purchased for direct implementation of a grant program (such as computers and copy machines) must be dedicated to direct implementation efforts and not put to general use, a region may be required to use funds for rental space, office equipment, lights, phones, etc. to segregate the direct implementation effort from the regional office location. However, Permanent Change of Station (PCS) costs to relocate an employee (particularly the household goods portion of the PCS) can not be charged to STAG - all personnel and travel costs should be borne by the Agency's appropriations already available forthat purpose, not STAG. Providing part of a grant award as "In-Kind" assistance to help a state or tribe carry out its own environmental program does not constitute direct implementation by EPA. It is not the option of the regional office whether or not to directly implement a state or tribal environmental program if the Agency is required by law to carry it out in the absence of an authorized state or tribal program. The state must be unable to perform all or part of a grant or otherwise be unable to accept primacy (e.g. sometimes a state constitution does not provide for a matching funds requirement for the state to be able to accept primacy.) 118 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 I. ADDITIONAL GRANTS INFORMATION Specific Statutory Authority Federal agencies have inherent authority (subject to applicable procurement laws and the Federal Acquisition Regulations or FAR) to enter into contracts to carry out agency missions. Grants and cooperative agreements, however, require specific statutory authority and the citation for that authority must be included on the grant award. Three things are needed to award a grant: 1) specific statutory authority, 2) funding provided forthe purpose of the grant, and, 3) an eligible grant recipient. Acquisition VS Assistance The Federal Grant & Cooperative Agreement Act (FGCAA), 31 U.S.C. 6301 et. seq., provides that grant and cooperative agreements must be awarded fora principal purpose of support and stimulation, rather than to acquire services or products which directly benefit the government. In interpreting the FGCAA, EPA Order 5700.1, states: If an office or laboratory's principal purpose in undertaking a project is to obtain a product or service for the direct benefit or use of the Agency, or any part of the Federal government including the legislative and judicial branches, a contract, ratherthan a grant (assistance agreement), must be used. The decision to use a contract or an assistance agreement must be based solely on the principal purpose of the relationship. If EPA's principal purpose is acquiring property or services from a recipient for direct Agency (or government) benefit or use, an acquisition relationship exists requiring the use of a contract. If EPA is funding a recipient to support or stimulate activities that are not principally forthe direct benefit or use of the Federal Government, and the award is authorized by federal statute, an assistance relationship exists and a financial assistance agreement (i.e., grant or cooperative agreement) may be used. To view the specific GIAMD policy (EPA Order 5700.1) for distinguishing between assistance and acquisition, go to the following intranet URL sites: http://intranet.epa.qov/rmpolicy/ads/orders/5700 1 .pdf and/or http://intranet.epa.goV/OGD/policv/7.0-GPI-GPI-94-04.htm Selecting between a Grant or Cooperative Agreement After an office or laboratory determines that an assistance agreement rather than a contract is appropriate, it must then decide whether to use a grant or a cooperative agreement to provide the assistance. The office or laboratory must base this decision on the extent and nature of the Agency's involvement in the activities to be supported under the agreement. 1. Grant Agreements. EPA shall use a grant agreement whenever an assistance agreement is appropriate and the office or laboratory does not anticipate substantial involvement with the recipient during performance of the contemplated activities. 2. Cooperative Agreements. EPA shall use a cooperative agreement whenever an assistance agreement is appropriate and the office or laboratory anticipates substantial involvement with the recipient during performance of the contemplated activity. Page 11 of EPA Order 5700.1 dated March 22, 1994, titled "Policy for Distinguishing Between Assistance and Acquisition (located at http://intranet.epa.qov/rmpolicy/ads/orders/5700 1 .pdf) describes the potential criteria that might be present for what constitutes "substantial involvement" for selecting a Grant or Cooperative Agreement for the recipient. 119 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Policy for Competition in Assistance Agreements In August 2004, GIAMD revised EPA Order 5700.5 - "Policy for Competition of Assistance Agreements". For the "Effective Date" the policy states: "The requirements of this Order apply to: (1) competitive announcements issued, released, or posted after January 14, 2005; (2) assistance agreement competitions, awards, and disputes based on competitive announcements issued, released, or posted after January 14, 2005, (3) non-competitive awards resulting from non-competitive funding recommendations submitted to a Grants Management Office after January 14, 2005, and (4) assistance agreement amendments issued after January 14, 2005". The authority for this Order is the Federal Grant and Cooperative Agreement Act of 1977, as amended, 31 U.S.C. 6301 (3). The policy further states that "It is EPA policy to promote competition to the maximum extent practicable in the award of assistance agreements. When assistance agreements are awarded competitively, EPA policy requires that the competitive process be fair and impartial, that all applicants be evaluated only on the criteria stated in the announcement, and that no applicant receive an unfair competitive advantage." The Competition Policy (EPA Order 5700.5A1) applies to all EPA assistance agreements except for those set forth in Section 6.c of the Order. To view EPA Order 5700.5A1 for applicability and exemptions for competitive policy, see intranet URL site: http://intranet.epa.gov/ogd/policy/order/5700_5.pdf J. SPLIT FUNDING WITH MULTIPLE APPROPRIATIONS Procurements The use of more than one appropriation on a single work assignment, delivery order, or project is known as split funding with multiple appropriations. EPA receives funding for contracts from several appropriations and may fund a procurement from one or more of these appropriations depending on the nature of the goods or services provided. There is an Agency requirement that Office of Financial Management (OFM) approval of allocation methods must be obtained when more than one appropriation is the source of funds on a procurement. Office of Comptroller Policy No. 96-05 further stated that split funding applied to all programs that use multiple appropriations where costs are not directly allocable (and not just Superfund). Allocation of funding must be based on appropriation benefit, rather than which account can "afford" the work. Or stated another way, the appropriations cited on the contract must benefit from the work being done by the contractor. The use of funds from one appropriation because of the absence of funding in another violates basic appropriation law. As stated in Chapter 2, Section M, Accounts Payable Certifying Officers are legally responsible for ensuring that payments on each contract are made from the proper account. To carry out this responsibility the following procedures are necessary to assure full Agency compliance with GAO standards and with legal requirements: 1. Methodology Office of Financial Management (OFM) must approve the Contracting Officer Representative's (COR) rationale for allocating costs among appropriations so that the payment of vouchers can be done accurately. The COR must document the rationale for the use of multiple appropriations and include in the rationale an estimate of the costs to be charged each appropriation and the method for distributing the costs to the benefiting appropriations. All program offices contributing funds to the procurement must indicate on the rationale their concurrence with the estimate. 120 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Costs must be allocated based on a formula derived from the estimated benefits to each appropriation. ]f each task, work assignment, or delivery order within the multi-funded contract will be funded from a single appropriation, OFM approval is not required. POs are encouraged to structure tasks in this manner. The COR of the contract must include a copy of the approved rationale for using multiple appropriations with the PR submitted to the contracts office. 2. Voucher Payment - whenever a procurement has multiple account funding, the COR must provide the FMO with the appropriations (and amounts) on the invoice approval so that vouchers for payment are charged correctly. The finance office will follow the methodology and charge contract vouchers to the appropriate account number and DCN as specified by the methodology. For more information on funding procurements with multiple appropriations, see EPA's new Contracts Management Manual (dated June 2004) Chapter 7, Section 7.4 "Accounting for Appropriations in Contracts", and Comptroller Policy Announcement 86-02 and 88-01. Grants/Cooperative Agreements OGD, with the assistance of opinions from the Office of General Counsel (OGC) established their policy for Multiple Appropriation (M.A.) grants in FY 2001. It states: "It is EPA policy generally to use only one appropriation as the funding source for an assistance project. Where a project's activities benefit more than one appropriation, the Agency should award separate grants forthe activities falling within the scope of each appropriation. However, a single, MA grant may be awarded, with adequate justification documented in the grant decision memorandum, and on an exception basis, if all of a projects activities are of a type that is fundable from all of the supporting appropriations. Separate grants must be awarded if all of the supporting appropriations are not legally available for all of the types of activities to be performed. This is because of the procedural difficulties involved in individually charging payments to the benefited appropriations. In awarding and administering separate grants, the Agency will work to minimize application, accounting and reporting burdens on recipients." As part of the justification for an MA grant, the Project Officer must include in the decision memorandum a description of the methodology for charging payments that reflects the proportional benefit to each appropriation. When developing their allocation methodology, Project Officers must use the guidelines issued by the OCFO. A suggested sample allocation methodology accompanying the decision memorandum could look like the following: 121 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Sample Allocation Methodology for 000000-01-0 All of the project's activities are of a type that is fundable from all of the supporting appropriations. Project or Description support Tribal capacity building ill training? in control support. Tribal capacity building activities in hazardous waste- related activities Appropriation B T Total Funding Request <8> 1 93.00O 32.0OO 225. OOO Funding; % 86° o 14% 100% Project Officers may contact their SFOs, or where necessary, OGC or the appropriate Office of Regional Counsel (ORC), should they need further guidance. (The funding placed on the grant must be consistent with the allocation methodology.)" The Multiple Appropriations Awards Policy can be found in its entirety at: http://intranet.epa.gov/OGD/course Iibrarv/m5 funding/4.5-INFO-FA.htm Although split-funded grants and cooperative agreements are not reviewed by the Office of Financial Management (OFM), allocation methodologies are subject to audit and a rationale must be established internally by the funding organization. K. LAYOFFS BETWEEN APPROPRIATIONS EPA's operating costs are usually charged directly to an appropriation through the Agency's account code structure. For example, a Superfund employee's pay would be charged to a Superfund appropriation account number (the employee's Fixed Account Number). However, many support services may benefit activities that are funded from more than one appropriation, but the amount of support benefiting each appropriation cannot be directly measured. As a result, there may be no way to track and report which increments of time worked, or portion of a purchased item, are in support of which appropriation's activities. Allocating time worked or other support costs among appropriations is an acceptable method of charging costs. Program offices which allocate costs must have a measure of benefit for allocating or "laying-off' costs to an appropriation (i.e. the ratio of costs from one appropriation to the total costs, where the ratio represents the proportion of service provided to the various recipients of that service). The derived percentage(s) is multiplied against the total amount of support costs (or total FTE PC&B costs if laying off personnel costs) to be distributed. The calculated amounts are then recorded against the respective appropriations. This plan must be adhered to by all offices responsible for distributing support costs or needing to allocate hours worked. 122 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 RMDS 2550D, Chapter 5 entitled "Allocation of Personnel and Support Costs to the Superfund Appropriation" describes in further detail allocation methodologies used to redistribute costs, or layoff appropriations. Although Superfund is specifically mentioned in the chapter title, the methodologies described can be applied to any Trust Fund or appropriation. L. FEES AND FEE PROGRAMS Only if authorized by statute, can collections that are received by the Agency be obligated by EPA during that fiscal year. Otherwise, the fees must be deposited as Miscellaneous receipts to Treasury as required by 31 U.S.C. 3302 (b), or as directed in a statute. EPA is already receiving all the funding that we can rationalize in our budget justification. The fees we collect go back to Treasury and OMB/Congress considers them to be offsets to our appropriated dollars. Thus, funds the Agency collects may actually get appropriated back to us in our environmental programs. For the Agency to be able to use the collected fees held at Treasury, they would have to be specifically appropriated by Congress. Were that to happen, the Agency could expect a reduction in appropriated funds from General Revenues, so there would be no net gain. The OCFO environmental finance staff is responsible for reviewing Agency user fees. Their web site is: http://www.epa.gov/efinpage/ 123 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 EXHIBITS 124 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 Funds Control Relationships in EPA Responsible Planning and Implementation Office (AA for OPPTS) I Senior Resource, Official Director Office of Budget /Senior Resource/ Responsible Planning and Implementation Office (AAforOSWER) Regional Comptroller Senior Budget Office Senior Budget Officer Allowance Holder Pollution Prevention & Toxics Allowance Holder AllowanceNHolder Office of SolichWaste Allowance Holder Immediate Office, OSWER Pesticides Programs unds Control Officer Funds Control Officer Funds Control Officer Allowance Holder Immediate Office OPPTS Allowance Holder Office of Emergency And Remedial Response Allowance Holder Office of Underground Storage Tanks I Funds Control Officer I Funds Control Officer I Funds Control Officer EXH B T-2520-2-1 /unds Control Officer 125 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 02/04/08 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY WASHINGTON, D.C. OFFICE of XXXXXXXXX (Mail code) MEMORANDUM SUBJECT: Designation of Funds Control Officer FROM: (Title of Allowance Holder) \signed\ TO: Office of Budget (2732A) The purpose of this memorandum is to inform you that in accordance with Chapter 2520 of the Resources Management Directives System (RMDS); Administrative Control of Appropriated Funds, the following individual(s) (Name) been designated as the Funds Control Officer (FCO) and/or Alternate Funds Control Officer for this Office. The FCO's financial management authority to commit properly executed funding documents is restricted to resources allotted to the Allowance Holder(s) / Responsibility Center(s) indicated. Under no circumstances will the FCO be permitted to sign for commitment documents outside the authority, scope or control of the AH/Responsibility Center(s) listed above. As stated in RMDS 2520, by signing in the funds certification block on funding documents, the FCO understands and accepts the responsibility that his/her signature on a document certifies that the document has passed his/her personal review and that the funds cited are available as to the appropriate purpose, time, and amount. The FCO is also responsible for notifying obligating officials if committed funds are subsequently decommitted in IFMS. The FCO will also be responsible for maintaining a document control tracking system which will reconcile funding documents against the EPA Integrated Financial Management System (IFMS), and also assist the Allowance Holder in maintaining proper funds control management. For verification, their signatures are provided below: Signature of new FCO and/or Signature of Alternative FCO EXHIBIT - 2520 - 2-2 126 ------- Funds Control Officer (FCO) Designation In accordance with Chapter 2520 of the Resources Management Directives System (RMDS); Administrative Control of Appropriated Funds, the following persons are officially designated as Funds Control Officers (FCOs) or Alternate Funds Control Officer (AFCO) for the office listed below: RPIO Abbreviation and Code (e.g. OCFO 17): Allowance Holder Code (e.g. 42): RC CODE(S)(e.g.42a) FCO NAME(S) LIST IF MORE THAN 1 NAME OF ALTERNATE(S) ARA / SENIOR RESOURCE OFFICIAL DATE EXHIBIT-2520-2-2 127 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 SFO# 99 22 SERVICING FINANCE OFFICER (SFO) LIST Address Responsibility Director Washington Finance Center Mailcode (2734R) 1200 Pennsylvania Avenue, N. W. Washington, DC 20460 Director RTP Finance Center U.S EPA, MD-32 T.W. Alexander Drive, Adm. Bldg. Research Triangle Park, N. C. 27711 Headquarters Training Labor Distribution Time and Labor Administration All Purchase Orders RTP Training All Contracts All Working Capital Fund Service Agreements 33 Director Las Vegas Finance Center P.OBox98515 Las Vegas, Nevada 89193-8515 Agreements Las Vegas Training All Assistance Agreements All State Grants and Cooperative 27 Director Cincinnati Finance Center 26 Martin Luther King Drive Cincinnati, OH 45268-7002 All Bankcards All Interagency Agreements (IAG) Payments to Federal Agencies All Travel Processing Payments & Collection of I PA Assignments Permanent Change of Station (PCS) for EPA and other federal agencies Federal Register Notices Cincinnati Training EXHIBIT-2520-2-3 128 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 FY 2007 FUND (Appropriation) Codes FY2007 Approp. Code Bud Year Treasury Symbol Bud Year Treasury Symbol Title B BR BR2 BR3 BR5 LR B2 B3 B4 B5 B9 C CR CR1 CR3 CRR C2 C3 C4 C9 D DC F FC FS1 F8 E1 E1C E2 E2C E3 ESC E4 E4C E9 GZZ Environmental Programs and Management (EPM) EPM Reimbursable (Multi-Year) EPM Reimbursable - Ocean Dumping (Multi-Year) 06/07 06/07 06/07 EPM Reimbursable - IPA and Non-Federal (Multi-Year) 06/07 EPM Recycling Proceeds (No Year) EPM Reimbursable Biowatch AC&C No-Year c/o DOE Approp Transfer Agency for Intern. Development Approp Transfer Agency for Intern. Development Approp Transfer Homeland Security Supplemental C/O EPM Science and Technology (S&T) S&T Reimb. (Multi-Year) S&T Reimb. S&T - IPA and Non Federal (Multi-Year) S&T Reimbursable Homeland Security R&D No Yr c/o Superfund - S&T; for Execution DOT Approp Transfer/ S&T Homeland Security Supplemental C/O S&T Buildings & Facilities Buildings & Facilities C/O LUST LUST C/O LUST Katrina Supplemental; PL 109-234 LUST Katrina Supplemental C/O PL 1 09-1 48 State and Tribal Assistance Grants (STAG) STAG Categorical Grants STAG Categorical Grants Carryover STAG Clean Water SRF STAG Clean Water SRF Carryover STAG Drinking Water SRF STAG Drinking Water SRF Carryover STAG Special Programs STAG Special Program Carryover STAG Homeland Security Supplemental Construction Grants 1993 and Prior 07 06/07 07 07 06/07 07 07 06/07 06/07 06/07 06/07 06/07 07 06/07 07 07 07 07 07 07 06/07 07 07 07 07 07 07 07 07 07 07 07 686/70108 686/70108 686/70108 686/70108 68X0108 686/70108 68X0108 68X0108 686/70108 68X0108 68X0108 686/70107 686/70107 686/70107 686/70107 686/70107 68X0107 685/60107 68X0107 68X0107 68X0110 68X0110 68-20X8153 68-20X8153 686/78153 68-20X8153 68X0103 68X0103 68X0103 68X0103 68X0103 68X0103 68X0103 68X0103 68X0103 68X0103 07/08 07/08 07/08 07/08 07/08 07/08 07/08 07/08 07/08 07/08 07/08 07/08 687/80108 687/80108 687/80108 687/80108 687/80108 687/80108 687/80107 687/80107 687/80107 687/80107 687/80107 687/80107 EXHIBIT-2520-3-1 129 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 Object Class Relationships: H HC HR N N2 NR P P1 T TC TCD TR TR1 TR2 TR2A TR2B TR3 T4 T9 WR Y ZA ZB ZG Oil Spill Oil Spill Approp Dollars C/O Oil Spill - Reimb. Inspector General Superfund - IG; for Execution Inspector General Reimb. (Multi-Year) FIFRA Pesticide Registration Fund Superfund Superfund Appropriated Funds C/O Superfund Appropriated Funds C/O Deobs Superfund Reimb. -All Other SF Reimb. - SSC SF Reimb. - Cashouts SF Special Acct Fed Unearned Adv SF Past Costs and interest from Treasury Superfund - IPA Nat'l Drug Contrl Policy Approp Transfer Homeland Security Supplemental C/O Superfund Working Capital Fund (Service Agrmts) Tolerance Fund C/O Miscellaneous Accounts: Operations, Research & Facilities Energy R&D Exxon Valdez Settlement Fund 07 68X8221 07 68X8221 07 68X8221 06/07 686/70112 07/08 687/80112 06/07 686/70112 07/08 687/80112 06/07 686/70112 07/08 687/80112 07 68X4310 07 68X5374 07 68-20X8145 07 68-20X8145 07 68-20X8145 07 68-20X8145 07 68-20X8145 07 68-20X8145 07 68-20X8145 07 68-20X8145 07 68-20X8145 07 68-20X8145 07 68-20X8145 07 68X4565 07 68X4311 07 68X0100 07 68X0109 07 68X5297 130 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 OMB Object Classification Codes 11.1-11.9 12.1-13.0 21.0-26.0 31.0-33.0 41.0-44.0 Personnel Compensation Benefits Contractual Services and Supplies Acquisition of Equipment and Land Grants and Fixed Assets EPA Budget Object Classes 10 - Personnel Compensation & Benefits 21 - Travel 28 - Site Travel 36 - Expenses 37 - Contracts 38 - WCF EPA Financial Sub-Object Class Codes (Several hundred broken out in more detail by OMB Object Class Code. See _RMDS 2590 at http://intranet.epa.gov/ocfo/policies/ resource.htm for their definitions). EXHIBIT 2520-3-2 131 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 BUDGET HIERARCHY The organizational hierarchy of the IFMS budget subsystem and the related inquiry tables are displayed in the exhibit below: Organizational Level FULL CONTROL Agency Sample Codes APPROPRIATION BFY: 07 08 APPR: B Inquiry Tables APPR Agency APPORTIONMENT QTR: 1 APOR RPIO ALLOCATION BFY: 07 08 APPR: B RPIO: 17 ALOC Allowance Holder SUBALLOCATION BFY: 07 08 APPR: B SALC RPIO: 17ORG:42 PRESENCE CONTROL Allowance Holder ALLOWANCE BFY: 07 08 APPR: B RPIO: 16ORG:42 PRC: ZZZJE5M BOC: 30 ALLT NO CONTROL Responsibility Center SUBALLOWANCE BFY- 07 08 APPR: B SASP/SAIN EXHIBIT-3-3 132 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 HOW TO WRITE A REPROGRAMMING JUSTIFICATION Written justifications provide the permanent audit trail of explanations for EPA's resource reprogrammings. The justification protects the initiator by establishing the rationale forthe action and making it part of the data record. Concise, well written justifications are essential to the success of IFMS as an administrative system. The coded data on your reprogramming already indicates: 1. Programs involved (PRC Codes) 2. Offices involved (RPIO/A.H. Codes) 3. Dollar and FTE Amounts DO NOT REPEAT THIS INFORMATION AS YOUR JUSTIFICATION What you should be providing as your justification is simply: 1. What the reprogramming is buying for programs, activities, or offices receiving an increase? 2. What the impact is to the programs, activites, or offices losing resources? Something previously budgeted for has been reduced. Have priorities or schedules changed? EXAMPLE: Proper Justification: This action reprograms $200K for additional contractor support and $80 for additional research equipment to accelerate the level of Acid Rain research in this fiscal year. The Air research contract with the XYZ Corporation will be put off until next year as a result of this reprogramming. Poor Justification: Transfers funds from the New Chemical Review PRC to the Chemical Registration PRC to meet end-of-year needs. Point of contact This information should include the name and telephone number of both a budget and a program staff member. EXHIBIT - 2520 - 3-4 133 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 APPENDIX A BUDGET TERMS and DEFINITIONS Excerpted from the GAO Glossary 134 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 Budget Terms and Definitions Account A separate financial reporting unit for budget, management, and/or accounting purposes. All budgetary transactions are recorded in accounts, but not all accounts are budgetary in nature (that is, some accounts do not directly affect the budget but are used purely for accounting purposes). Budget (and off-budget) accounts are used to record all transactions within the budget (or off-budget), where other accounts (such as deposit fund, credit financing, and foreign currency accounts) are used for accounting purposes connected with funds that are non-budgetary in nature. The Budget Enforcement Act defines account as "an item for which appropriations are made in any appropriation act; for items not provided for in appropriation acts, account means an item for which there is a designated budget account identification code number in the President's budget." Account in the President's Budget: Expenditure/Appropriation and Receipt Accounts - classified by Fund Types Accounts used by the federal government to record outlays (expenditure ac counts) and income (receipt accounts) primarily for budgeting or management information purposes but also for accounting purposes. All budget (and off budget) accounts are classified as being either expenditure or receipt (including offsetting receipt) accounts and by fund group. Budget (and off-budget) transactions fall within either of two fund groups: (1) federal funds and (2) trust funds. All federal fund and trust fund accounts are included within the budget (that is, they are on-budget) unless they are excluded from the budget by law. Federal and trust funds excluded from the budget by law are classified as being off-budget. The term off-budget differs from the term non-budgetary. Non-budgetary refers to activities (such as the credit financing accounts) that do not belong in the budget under existing concepts, while off-budget refers to accounts that belong on-budget under budget concepts but that are excluded from the budget under terms of law. Federal Fund Accounts Accounts composed of moneys collected and spent by the federal government other than those designated as trust funds. Federal fund accounts include general, special, public enterprise, and intra governmental fund accounts. General Fund Accounts. Federal fund accounts composed of all federal money not allocated to any other fund account. 1. General Fund Receipt Account A receipt account credited with all collections that are not earmarked by law for a specific purpose. These collections are presented in the Budget of the United States Government as either governmental (budget) receipts or offsetting receipts. These include taxes, customs duties, and miscellaneous receipts. 2. General Fund Expenditure Account An appropriation account established to record amounts appropriated by law forthe general support of federal government activities and the subsequent expenditure of these funds. It includes spending from both annual and permanent appropriations. 135 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 Special Fund Accounts Federal fund accounts earmarked by law for a specific purpose. 3. Special Fund Receipt Account A receipt account credited with collections that are earmarked by law but included in the federal funds group rather than classified as trust fund collections. These collections are presented in the Budget of the United States Government as either governmental (budget) receipts or offsetting receipts. 4. Special Fund Expenditure Account An appropriation account established to record appropriations, obligations, and outlays financed by the proceeds of special fund receipts. Intra-governmental Fund Accounts Expenditure accounts authorized by law to facilitate financing transactions primarily within and between federal agencies on a revolving fund basis. 1. Intra governmental Revolving Fund Account An appropriation account authorized to be credited with collections, primarily from other agencies and accounts, that are earmarked to finance a continuing cycle of business-type operations, including working capital funds, industrial funds, stock funds, and supply funds. 2. Management Fund Account An account authorized by law to credit collections from two or more appropriations to finance activity not involving a continuing cycle of business-type operations. Such accounts do not generally own a significant amount of assets such as supplies, equipment, or loans, nor do they have a specified amount of capital provided-a corpus. The Navy Management Fund is an example of such an account. Consolidated Working Fund Accounts are a subset of management funds. These are special working funds established under the authority of Section 601 of the Economy Act (31 U.S.C. 1535, 1536) to receive advance payments from other agencies or accounts. Consolidated working fund accounts are not used to finance the work directly but only to reimburse the appropriation or fund account that will finance the work to be performed. Amounts in consolidated working fund accounts are available forthe same periods as those of the accounts advancing the funds. Consolidated working fund accounts are shown as separate accounts on the books of Treasury, but are not separately identified in the President's budget. Transactions of these accounts are included in the presentation of the appropriation or fund account actually performing the service or providing the materials. Trust Fund Accounts Accounts designated as trust funds bylaw, regardless of all other meaning of the words "trust fund."A trust fund account is usually either a receipt or an expenditure account. A trust revolving fund, however, receives offsetting collections authorized to be credited to an expenditure account. Trust Fund Receipt Account A receipt account credited with collections classified as trust fund collections. These collections are presented as either governmental (on-budget or off-budget) receipts or offsetting receipts. Trust Fund Expenditure Account An appropriation account established to record amounts appropriated to finance programs specified by law as being trust funds. Such funds may be on-budget or off-budget. 136 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 Trust Revolving Fund Account A trust fund expenditure account that is an appropriation account authorized to be credited with collections and used to carry out a cycle of business-type operations in accordance with statute. Allocation For the purposes of budgeting, an allocation is the amount of budget authority transferred from one agency, bureau, or account that is set aside in a transfer appropriation account to carry out the purposes of the parent appropriation or fund. (The appropriation or fund from which the allocation is made is called the parent appropriation or fund.) For example, an allocation is made when one or more agencies share the administration of a program for which appropriations are made to only one of the agencies or to the President. Transactions involving allocation accounts appear in the Object Classification Schedule, with the corresponding Program and Financing Schedule, in the Budget of the United States. Allotment An authorization by either the agency head or another authorized employee to his/her subordinates to incur obligations within a specified amount. Each agency makes allotments pursuant to specific procedures it establishes within the general requirements stated in OMB Circular A-11 (Part 4 )/lnstructions on Budget Execution (formerly OMB Circular A-34). The amount allotted by an agency cannot exceed the amount apportioned by the Office of Management and Budget. Antideficiency Act Enacted legislation which: • prohibits the making of expenditures or the incurring of obligations prior to appropriations, • prohibits the incurring of obligations or the making of expenditures (outlays) in excess of amounts available in appropriation or fund accounts unless specifically authorized by law (31 U.S.C. 1341 (a)), • requires agencies to apportion appropriated funds and other budgetary resources (31 U.S.C. 1512), • requires a system of administrative controls within each agency (see 31 U.S.C. 1514 for the administrative divisions established), • prohibits incurring any obligation or making any expenditure (outlay) in excess of an apportionment or reapportionment or in excess of other subdivisions established pursuant to 31 U.S.C. 1513 and 1514 (31 U.S.C. 1517), • specifies penalties for Antideficiency violations (see Antideficiency Act Violation), • requires the apportionment of appropriation or fund accounts to prevent the need for a supplemental or deficiency appropriation, and • assists in bringing about the most effective and economical use of appropriations and funds (31 U.S.C. 1512-1519). The Act permits agencies to reserve funds (that is, withhold them from obligation)under certain circumstances. 137 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 Antideficiency Act Violation An Antideficiency Act violation occurs when one or more of the following occurs: • over obligation or over expenditure of an appropriation or fund account (31 U.S.C. 1341 (b)); • entering into a contract or making an obligation in advance of an appropriation, unless specifically authorized by law (31 U.S.C. 1341 (a)); • acceptance of voluntary service, unless authorized by law (31 U.S.C. 1342); or • over obligation or over expenditure of (1) an apportionment or reapportionment or (2) amounts permitted by the administrative control of funds regulations (31 U.S.C. 1517(a)). Penalties for Antideficiency Act violations include administrative discipline, such as suspension from duty without pay or removal from office. In addition, an officer or employee convicted of willfully and knowingly violating the law shall be fined not more than $5,000, imprisoned for not more than 2 years, or both (31 U.S.C. 1349, 1350, 1518, and 1519). Apportionment An action by which OMB distributes amounts available for obligation, including budgetary reserves established pursuant to law, in an appropriation or fund account. An apportionment divides amounts available for obligation by specific time periods (usually quarters), activities, projects, objects, or a combination thereof. The amounts so apportioned limit the amount of obligations that may be incurred. In apportioning any account, some funds may be reserved to provide for contingencies or to effect savings, pursuant to the Antideficiency Act. Funds, including Antideficiency Act reserves, may also be proposed for deferral or rescission pursuant to the Impoundment Control Act of 1974 (2 U.S.C. 681-688). The apportionment process is intended to (1) prevent the obligation of amounts available within an appropriation or fund account in a manner that would require deficiency or supplemental appropriations and (2) achieve the most effective and economical use of amounts made available for obligation. Appropriation Act A statute, under the jurisdiction of the House and Senate Committees on Appropriations, that generally provides legal authority for federal agencies to incur obligations and to make payments out of Treasury for specified purposes. An appropriation act fulfills the requirement of Article I, section 9 of the Constitution, which provides that no money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law." Consequently, even entitlements must be funded by appropriations; however, such appropriations (often permanent, indefinite ones that are not under the jurisdiction of the appropriations committees) may be created by authorizing legislation. An appropriation act generally follows enactment of authorizing legislation unless the authorizing legislation provides budget authority. The three major types of appropriation acts are regular, supplemental, and continuing. Regular appropriation acts are all appropriation acts that are not supplemental or continuing. Currently, 13 regular appropriation acts are considered annually. From time to lime, supplemental appropriation acts are also enacted. When action on regular appropriation bills is not completed before the beginning of the fiscal year, a continuing resolution or bill may be enacted to provide funding for the affected agencies for the full year, up to a specified date, or until their regular appropriations are enacted. 138 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 Authorizing Committee A standing committee of the House or Senate with legislative jurisdiction over the subject matter of those laws, or parts of laws, that set up or continue the operations of federal programs or agencies. An authorizing committee also has jurisdiction in those instances where backdoor authority is provided in the substantive legislation. Authorizing Legislation Substantive legislation that sets up or continues the operation of a federal program or agency either indefinitely or for a specific period of time or that sanctions a particular type of obligation or expenditure within a program. Authorizing legislation is normally a prerequisite for appropriations. It may place a limit on the amount of budget authority to be included in appropriation acts or it may authorize the appropriation of ~such sums as may be necessary." In some instances, authorizing legislation may provide authority to incur debts or may mandate payment to particular persons or political subdivisions of the country. Budget Amendment A revision to a pending budget request which the President submits to the Congress before the Congress completes appropriations action. Budget Authority Authority provided by law to enter into financial obligations that will result in immediate or future outlays involving federal government funds. Budget authority includes the credit subsidy cost for direct loan and loan guarantee programs, but does not include authority to insure or guarantee the repayment of indebtedness incurred by another person or government. The basic forms of budget authority include (I) appropriations, (2) borrowing authority, (3) contract authority, and (4) authority to obligate and expend offsetting receipts and collections. Budget authority may be classified by its duration (l-year, multiple-year, or no-year), by the timing of the legislation providing the authority (current or permanent), by the manner of determining the amount available (definite or indefinite), or by its availability for new obligations. Forms of Budget Authority are: 1. Appropriations Authority given to federal agencies to incur obligations and to make payments from Treasury for specified purposes. An appropriation act, the most common means of providing budget authority, usually follows the enactment of authorizing legislation, but in some cases the authorizing legislation itself provides the budget authority. Appropriations do not represent cash actually set aside in Treasury for purposes specified in the appropriation act; they represent authority that agencies may use to obligate funds during the period of time specified in the respective appropriation acts. Certain types of appropriations are not counted as budget authority because they do not provide authority to incur obligations. Among these are appropriations: • liquidate contract authority (legislation to provide funds to pay obligations incurred against contract authority) • to redeem outstanding debt (legislation to provide funds for debt retirement), and to refund receipts. 139 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 2. Authority Authority that permits agencies to incur obligations and make payments to liquidate the obligations out of borrowed moneys. Usually the funds are borrowed from Treasury, but in a few cases agencies borrow directly from the public. Borrowing authority does not include Treasury's authority to borrow from the public or other sources. 3. Contract Authority Authority that permits obligations to be incurred in advance of appropriations or receipts. Contract authority is therefore unfunded and a subsequent appropriation or offsetting collection is needed to liquidate the obligations. 4. Offsetting Receipts and Collections Authority to obligate and expend the proceeds of offsetting receipts and collections. The Congressional Budget Act of 1974, as amended by the Budget Enforcement Act of 1990, defines offsetting receipts and collections as negative budget authority and the reductions thereof as positive budget authority. Amount Determinations are: • Definite Authority Budget authority which is stated as a specific sum at the time the authority is granted. This type of authority, whether in an appropriation act or other law, includes authority stated as "not to exceed" a specified figure. • Indefinite Authority Budget authority of an unspecified amount of money. Indefinite budget authority (usually an appropriation) maybe appropriated as all or part of the amount of proceeds from the sale of financial assets, the amount necessary to cover obligations associated with payments, the receipts from specified sources-the exact amount of which is determinable only at some future date or it may be appropriated as "such sums as may be necessary" for a given purpose. Duration can be: • One-Year (Annual) Authority Budget authority which is available for obligation only during a specific fiscal year and which expires, if not obligated, at the end of that time. It is also known as a "fiscal year" or "annual" budget authority. • Multiple-Year Authority Budget authority which is available for a specified period of time in excess of 1 fiscal year. This authority generally takes the form of 2-year, 3-year, etc., availability but may cover periods that do not coincide with the start or end of a fiscal year. For example, the authority may be available from July 1 of one year through September 30 of the following fiscal year, a period of 15 months. This type of multiple-year authority is sometimes referred to as "forward funding." No-Year Authority Budget authority that remains available for obligation for an indefinite period of time, usually until the-objectives for which the authority was made available are attained. 140 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 Extensions of Budget Authority are: • Reappropriation Statutory action to continue the availability, whether for the same or different purposes, of all or part of the unobligated portion of budget authority that has expired or would otherwise expire. Re- appropriations are counted as budget authority in the first year for which the availability is extended. • Continuing Appropriation/Continuing Resolution Legislation that may be enacted to provide budget authority for federal agencies and/or specific activities to continue in operation when the Congress and the President have not completed action on appropriations by the beginning of the fiscal year. Until regular appropriations are enacted, continuing appropriations may take their place. Continuing appropriations usually are passed in the legislative form of joint resolutions. A continuing resolution maybe enacted for the full year, up to a specified date, or until regular appropriations are enacted. A continuing resolution usually specifies a maximum rate at which the obligations may be incurred based on levels specified in the resolution. The resolution may state that obligations may not exceed the current rate or must be the lower of the amounts provided in the appropriations bills passed in the House or Senate. If enacted to cover the entire fiscal year, the resolution will usually specify amounts provide for each appropriation account. Timing of Legislative Action: • Current Authority Budget authority made available by the Congress in or immediately prior to, the fiscal year or years during which the funds are available for obligation. • Permanent Authority Budget authority that is available as the result of previously enacted legislation and which does not require new legislation for the current year. Such budget authority can be the result of substantive legislation or appropriation acts. When budget authority is enacted that will be treated as permanent authority in subsequent years, it is treated as permanent authority the first year it becomes available, as well as in succeeding years. Availability for New Obligations: • Expired Budget Authority Budget authority which is no longer available to incur new obligations. Such authority is still available for 5 years (7 years at EPA) afterthe account expires forthe payment of those valid obligations which were incurred before the authority expired. Unobligated balances of expired budget authority remain available for 5 years (7 years at EPA) after the account expires to cover adjustments to prior obligations or obligations that should have been but may not have been recorded at that time. (For a statutory reference, see 31 U.S.C. 1552 (a)(2). • Unexpired Budget Authority Budget authority which is available for incurring new obligations. Budget Estimates Estimates of budget authority, outlays, receipts, or other budget measures that cover the current, budget, and future years, as reflected in the President's budget and budget updates. Budget Preparation System (formerly BPS, now MAX) A computer system used by OMB to collect and process much of the information required for preparing the budget. 141 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 Budgetary Resources The forms of authority given to an agency allowing it to incur obligations. Budgetary resources include the following: new budget authority, unobligated balances, direct spending authority, and obligation limitations. Carryover Unobligated balance of an appropriation account which has not expired at the end of the fiscal year. The treatment of carryover appropriated funds are discussed in Chapters, Section II.C "Carryover of Unobligated Balances" of this Manual. Closed Account An appropriation account whose balance has been canceled. Once balances are canceled, the amounts are not available for obligation or expenditure for any purpose. An account available for a definite period (fixed appropriation account) is canceled 5 fiscal years (7 years for EPA) after the period of availability for obligation ends. An account available for an indefinite period (no-year account) is canceled if (1) the head of the agency concerned or the President determines that the purposes for which the appropriation was made have been carried out and (2) no disbursement has been made against the appropriation for 2 consecutive fiscal years. Commitment A commitment is an administrative reservation of an allotment or of other funds in anticipation of their obligation. Congressional Budget The budget as set forth by the Congress in a concurrent resolution on the budget. By law, the resolution establishes, for the fiscal year beginning on October 1 of the year of the resolution, planning levels forthe 2 following fiscal years and appropriate levels forthe following: • total federal revenues; • the surplus or deficit hi the budget; • new budget authority, budget outlays, direct loan obligations, and primary loan guarantee commitments in total and for each major functional category; • the public (Treasury) debt practically defined as debt subject to statutory limit; and • for purposes of protecting Social Security trust funds in the Senate, Social Security outlays and revenues. Congressional Budget Act The law (Titles I-IX of the Congressional Budget and Impoundment Control Act of 1974, as amended, 2 U.S.C. 601461) that established the congressional budget process and created the Senate and House Budget Committees and Congressional Budget Office. The act created a timetable for the budget process, established a requirement for a yearly concurrent resolution on the budget and procedures concerning its adoption and set forth a procedure called reconciliation to assure congressional committee compliance with the concurrent resolution on the budget. Contingent Liability An existing condition, situation, or set of circumstances which poses the possibility of a loss to an agency that will ultimately be resolved when one or more future events occur or fail to occur. Contingent liabilities may lead to outlays. Contingent liabilities arise, for example, with respect to unadjudicated claims and flood insurance, loan guarantee programs, and bank deposit insurance programs. Contingent liabilities are 142 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 normally not covered by budget authority. However, under credit reform, for most programs, loan guarantee commitments cannot be made unless the Congress has made appropriations of budget authority to cover the credit subsidy cost in advance in annual appropriations acts. Financing Account A non-budget account (or accounts) associated with each credit program account which holds balances, receives the subsidy cost payment from the credit program account, and includes all other cash flows to and from the government resulting from direct loan obligations or loan guarantee commitments made on or after October 1, 1991. Deferral of Budget Authority Temporary withholding or delaying the obligation or expenditure of budget authority or any other type of executive action which effectively precludes the obligation or expenditure of budget authority. Budget authority may be deferred to provide for contingencies, to achieve savings or greater efficiency in the operations of the government, or as otherwise specifically provided by law. Budget authority may not be deferred in order to effect a policy in lieu of one established by law or for any other reason. Deferrals may be proposed by agencies but must be communicated to the Congress by the President in a special message. Deferred budget authority may not be withheld from obligation unless an act is passed to approve the deferral and the act is presented to the President. Additionally, unless the Congress has approved a deferral, budget authority whose availability expires at the end of the fiscal year must be made available with sufficient time remaining in the fiscal year to obligate that budget authority before the end of the fiscal year. Deficiency Apportionment An apportionment by the Office of Management and Budget for the fiscal year in an amount or rate that may compel the enactment of supplemental budget authority. Such apportionments may only be made under certain specified conditions as provided for in the Antideficiency Act, 31 U.S.C. 1515. In such instances, the need for additional budget authority is usually indicated by apportioning for the fourth quarter less than the amount that will actually be required. Approval of requests for deficiency apportionment does not authorize agencies to exceed available resources within an account. Deficiency Appropriation A type of supplemental appropriation which provides budget authority necessary | to cover obligations that have been incurred in excess of available authority. Deficit • Budget Deficit The amount by which the government's budget outlays exceed its budget receipts for a given period, usually a fiscal year. For purposes of defining deficits under Gramm-Rudman-Hollings as amended by the Budget Enforcement Act, this amount excludes the off-budget activities such as the outlays and receipts of the Postal Service and Social Security. • Total Deficit The amount by which the government's on-budget and off-budget outlays exceed the sum of its on-budget and off-budget receipts for a given period, usually a fiscal year. Deobligation An agency's cancellation or downward adjustment of previously recorded obligations. Earmarking Either of the following: 143 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 • Dedicating collections by law for a specific purpose or program. Earmarked collections comprise trust fund receipt accounts, special fund receipt accounts, and offsetting collections credited to appropriation accounts. These collections may be classified as budget receipts, proprietary receipts, or reimbursements to appropriations. • Dedicating appropriations fora particular purpose. Legislative language may designate any portion of a lump-sum amount for particular purposes. Emergency Appropriation (Budget Enforcement Act Term) For fiscal years 1991 through 1995, an appropriation designated as an emergency requirement by both the President and the Congress. Under BEA, the discretionary spending limits are adjusted by the total amount of such appropriations for the fiscal year in which the appropriation was enacted and each succeeding year through 1995 and will not cause a sequestration. Expenditure With respect to provisions of 31 U.S.C. 1341 (a) and 2 U.S.C. 622(1), a term that has the same definition as outlay or disbursement. Expense For accounting purposes, the outflow of assets or incurrence of liabilities (or both) during a period as a result of rendering services, delivering or producing goods, or carrying out other normal operating activities. Expired Account An appropriation or fund account in which the balance is no longer available for incurring new obligations because the time available for incurring such obligations has expired. Expired accounts will be maintained by fiscal year identity for 5 years (7 years at EPA). During this 5-year period (7 years at EPA), obligations may be adjusted if otherwise proper and outlays may be made from these accounts. Unobligated balances will not be withdrawn from expired accounts. They will remain available for legitimate obligation adjustments or for obligations properly chargeable to such accounts, which should have been but were not recorded, but not for new obligations. After the five-year period has elapsed, all obligated and unobligated balances are canceled and the expired account is closed. Fiscal Policy Federal government policies with respect to taxes and spending which are intended to promote the nation's macroeconomic goals, particularly with respect to employment, gross domestic product, price level stability, equilibrium in the balance of payments, the exchange rate, the current account, and the national savings/investment balance. The budget process is a major vehicle for determining and implementing federal fiscal policy. Fiscal Year Any yearly accounting period, regardless of its relationship to a calendar year. The fiscal year forthe federal government begins on October 1 of each year and ends on September 30 of the following year, it is designated by the calendar year in which it ends. For example, fiscal year 1990 began October 1,1989, and ended September 30,1990. (Prior to fiscal year 1977, the federal fiscal year began on July 1 and ended on June 30.) 1. Budget Year The fiscal year for which the budget formulation estimates are being considered, that is the fiscal year following the current year. For Budget Enforcement Act purposes, the term budget year means, with respect to a session of Congress, the fiscal year of the Government that starts on October 1 of the calendar year in which that session begins. 2. Current Year The fiscal year immediately preceding the budget year. For Budget Enforcement Act purposes, the term current year means, with respect to a budget year, the fiscal year that immediately precedes that budget year. 144 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 3. Prior Year The fiscal year immediately preceding the current year. Forward Funding - Forward funding can be defined in two ways: Appropriations of budget authority that are made available for obligation in the last quarter of the fiscal year for the financing of ongoing grant programs during the next fiscal year. Appropriations of budget authority that is available for a specified period of time, generally in excess of one fiscal year, which may cover periods that do not coincide with the start or end of a fiscal year. For example, an appropriation available from July 1, 2004 until September 30, 2005 (Comptroller General decision). Fund Accounting The legal requirement that federal agencies establish accounts for segregating revenues, other resources, related liabilities, obligations, and balances in order to carry out specific activities or achieve certain objectives in accordance with special regulations, restrictions, or limitations. In a broad sense, the federal government requires fund accounting to demonstrate agency compliance with existing legislation for which government funds have been appropriated or otherwise authorized. One of the most important laws requiring federal agencies to adhere to fund accounting concepts is the Antideficiency Act. Grant A federal financial assistance award making payment in cash or in kind for a specified purpose. The federal government is not expected to have substantial involvement with, the state or local government or other recipient while the contemplated activity is being performed. The term "grants" frequently has a broader meaning and may include grants to nongovernmental recipients, whereas the term "grants-in-aid" is commonly restricted to grants to states and local governments. The two major forms of federal grants-in-aid are block and categorical. Block grants are given primarily to general purpose governmental units in accordance with a statutory formula. Such grants can be used for a variety of activities within a broad functional area Examples of federal block-grant programs are the Omnibus Crime Control and Safe Streets Act of 1968, the Housing and Community Development Act of 1974, and the grants to states for social services under Title XX of the Social Security Act. Categorical grants can be used only for a specific program. They may be formula or project grants. Formula grants allocate federal funds to states or their subdivisions in accordance with a distribution formula prescribed by law or administrative regulation. Project grants provide federal funding for fixed or known periods for specific projects or the delivery of specific services or products. Impoundment Any action or inaction by an officer or employee of the federal government that precludes obligation or expenditure of budget authority. Incremental Funding The provision or recording of budgetary resources for a program or project based on obligations estimated to be incurred within a fiscal year when such budgetary resources will not cover all the program's or project's obligations. Contracts that cannot be separated for performance by fiscal year may not be funded on an incremental basis without statutory authority. Internal Control Plan of organization, methods, and procedures adopted by management to ensure that (1) resource use is consistent with laws, regulations, and policies; (2) resources are safeguarded against waste, loss, and misuse; and (3) reliable data are obtained, maintained, and fairly disclosed in reports. 145 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 Liability Assets owed for items received, services received, assets acquired, construction performed (regardless of whether invoices have been received), an amount received but not yet earned, or other expenses incurred. Liabilities include (1) amounts owed for goods in the hands of contractors under the constructive delivery concept (when an agency, the seller, meets long-term contract obligations) and (2) amounts owed under grants, pensions, awards, and other indebtedness not involving the furnishing of goods and services. Limitation A restriction on the amount of budgetary resources that can be obligated or committed for a specific purpose. While limitations are most often established through appropriations acts, they can also be established through authorizing legislation. Limitations may be placed on the availability of funds for program levels, administrative expenses, direct loan obligations, guaranteed loan commitments, or other purposes. For the purposes of the Budget Enforcement Act, obligation limitations are one type of budgetary resource because they establish the amount that can be obligated. M Account A successor account into which obligated balances (unexpended funds) under an appropriation were transferred from the expired account (merged) at the end of the second full fiscal yearfollowing expiration. The National Defense Authorization Act of 1991 (Public Law 101-510) amended the procedures for closing appropriation and fund accounts. Under this legislation, no new M accounts will be established and existing M accounts will be phased out. Merged Surplus Account An account that represented an unobligated balance from an appropriation whose period of availability had been expired for more than 2 years. The National Defense Authorization Act of 1991 (P.L. 101-510) amended the procedures for closing appropriation and fund accounts. Underthis legislation, no new merged surplus accounts will be established and existing ones will be phased out. Multiyear Budget Planning A process such as the one used to develop the President's budget and the Congressional budget designed to ensure that the long-range consequences of budget decisions are identified and reflected in the budget totals. The President's (or executive) budget includes multiyear planning estimates for budget authority, outlays, and receipts for 4 years beyond the budget year. The congressional budget process considers estimates covering a 3 year period. However, under the Budget Enforcement Act, congressional budgets cover a 5 year period. This process provides a structure for the review and analysis of long-term program and tax policy choices. OMB planning estimates are either presidential policy or current services estimates. Presidential policy estimates represent projections or extrapolations of likely outcomes based upon current law and enunciated administration policy. In some cases, outyear presidential policy estimates represent outyear policy rather than an extrapolation from budget-year policy. Current services estimates represent projections of possible outcomes based on the continuation of existing levels of service without policy changes. New Budget Authority Budget authority that first becomes available for obligation in a given fiscal year. This includes budget authority that becomes available as a result of a reappropriation or a statutory change in the availability of unobligated balances from a prior fiscal year. It also includes a change in the estimated level of indefinite budget authority. Object Classes A uniform classification identifying the obligations of the federal government by the types of goods or services purchased (such as personnel compensation; supplies and materials, and equipment) without regard to the agency involved orthe purpose of the programs for which they are used. If the obligations are in a single object classification category, the classification is identified in the Program and Financing Schedule in the Budget of the United States Government. For the activities distributed among two or more 146 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 object classification categories, the budget has a separate object classification schedule to show the distribution of the obligations by object classification. General instructions are provided in OMB Circular A-11. Obligational Authority The sum of (1) budget authority provided for a given fiscal year, (2) unobligated balances of amounts brought forward from prior years, (3) amounts of offsetting collections to be credited to specific funds or accounts during that year, and (4) transfers between funds or accounts. The balance of Obligational authority is an amount carried over from one year to the next because not all Obligational authority that becomes available in a fiscal year is obligated and paid out in that same year. Balances are described as (1) obligated, (2) unobligated, or (3) unexpended. Obligated Balances The amount of obligations already incurred for which payment has not yet been made. For a fixed appropriation account, this balance can be carried forward and retains its fiscal year identity for five fiscal years afterthe period of availability ends. At the end of the fiscal year, the account is closed and any remaining balance is canceled. Obligated balances of an appropriation account available for an indefinite period may be closed if (1) specifically rescinded by law, or (2) the head of the agency concerned or the President determines that the purposes for which the appropriation was made have been carried out and disbursements have not been made against the appropriation for 2 consecutive years. Unobligated Balance The portion of Obligational authority that has not yet been obligated. Unobligated balances whose period of availability has expired are not available for new obligation and may only be used for recording, adjusting, and liquidating obligations properly chargeable to the fiscal year account. For a fixed appropriation account, the balance can be carried forward for five fiscal years afterthe period of availability ends. At the end of the fifth fiscal year, the account is closed and any remaining balance is canceled. For a no-year account, the unobligated balance is carried forward indefinitely until (1) specifically rescinded by law, or (2) the head of the agency concerned or the President determines that the purposes for which the appropriation was made have been carried out and disbursements have not been made against the appropriation for 2 consecutive years. Unexpended Balance The sum of the obligated and unobligated balances. Obligations Incurred Amounts of orders placed, contracts awarded, services received, and similar transactions during a given period that will require payments during the same or a future period. Such amounts will include outlays for which obligations have not been previously recorded and will reflect adjustments for differences between obligations previously recorded and actual outlays to liquidate those obligations. Outlay The issuance of checks, disbursement of cash, or electronic transfer of funds made to liquidate a federal obligation. Outlays also occur when interest on the Treasury debt held by the public accrues and when the government issues bonds, notes, debentures, monetary credits, or other cash-equivalent instruments in order to liquidate obligations. Also, under credit reform, the credit subsidy cost is recorded as an outlay when a direct or guaranteed loan is disbursed. 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, flow in part from unexpended balances of prior-year budgetary resources and in part from budgetary resources provided forthe year in which the money is spent. 147 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 Outyear Any year (or years) beyond the budget year for which projections are made. For Budget Enforcement Act purposes, the term outyear means, with respect to a budget year, any of the fiscal years that follow the budget year through fiscal year 1995. Reapportionment A revision of a previous apportionment of budgetary resources for an appropriation or fund account. This revision must be approved by the Office of Management and Budget. Agencies usually submit requests for reapportionment to OMB as soon as a change becomes necessary due to changes in amounts available, program requirements, or cost factors. (For exceptions, see OMB Circular A-34, sec. 44.4.) This approved revision would ordinarily cover the same period, project, or activity covered in the original apportionment. Reimbursement A sum (1) 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 (2) that is authorized by law to be credited directly to specific appropriation and fund accounts. These amounts are deducted from the total obligations incurred (and outlays) in determining net obligations (and outlays) for such accounts. Reimbursements between two accounts for goods or services are an expenditure transaction/transfer. Anticipated reimbursements are, in the case of transactions with the public, estimated collections of expected advances to be received or expected reimbursements to be earned. In transactions between government accounts, anticipated reimbursements consist of orders expected to be received for which no orders have been accepted. Reobligation Obligation of deobligated funds for another purpose. Reprogramming Shifting funds within an appropriation or fund account to use them for different purposes than those contemplated at the time of appropriation (for example, obligating budgetary resources for a different program/program element from the one originally planned). While a transfer of funds involves shifting funds from one account to another, reprogramming involves shifting funds within an account. Reprogramming is generally preceded by consultation between federal agencies and the appropriate congressional committees. It often involves formal notification and opportunity for congressional committees to state their approval or disapproval. Rescission Legislation enacted by Congress that cancels the availability of budgetary resources previously provided by law before the authority would otherwise lapse. The Impoundment Control Act of 1974 (2 U.S.C. 683) provides for the President to propose rescissions whenever the President determines that all or part of any budget authority will not be needed to carry out the full objectives or scope of programs for which the authority was provided. Also, a rescission will be proposed if all or part of any budget authority limited to a fiscal year that is, annual appropriations or budget authority of a multiple-year appropriation in the last year of availability is to be reserved from obligation for the entire fiscal year. Rescission of budget authority may also be proposed for fiscal policy or other reasons. Amounts proposed for rescission are withheld for up to 45 calendar days of continuous session while the Congress considers the proposals. All funds proposed for rescission, including those withheld, must be reported to the Congress in a special message. If both houses have not completed action on a rescission proposed by the President within 45 calendar days of continuous session, any funds being withheld must be made available for obligation. Congress may also initiate rescissions through its own appropriations process. Such congressional action occurs for various reasons, including changing priorities, program terminations, excessive unobligated 148 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 balances, and program slippage. Rescission A bill or joint resolution that cancels, in whole or in part, budget authority previously granted by law. Rescissions proposed by the President must be transmitted in a special message to the Congress. Under section 1012 of the Impoundment Control Act of 1974 (2 U.S.C. 683), unless both houses of the Congress complete action on a rescission bill within 45 calendar days of continuous session after receipt of the proposal, the budget authority must be made available for obligation. Responsible Planning Implementation Office (s) - RPIOs RPIOs are the 23 EPA senior managers including: thirteen individuals in headquarters (the Administrator, General Counsel, Inspector General, nine Assistant Administrators (AAs)), and the ten Regional Administrators (RAs). Each has headquarters or regional operations to administer and a budget to execute. RPIOs are responsible for implementing operating plans, controlling resource ceilings, and reviewing programs. Restoration An unobligated amount previously withdrawn (that is, transferred out of an appropriation account) by administrative action that is returned to the account and again made available for obligation and outlay. Revenue Either of the following: • As used in the congressional budget process, a synonym for governmental receipts. Revenues result from amounts, such as receipts from individual income taxes, that are owed to the government but for which no current government action is required. Article I, section 7 of the U.S. Constitution requires that revenue bills originate in the House of Representatives. • As used in an accounting sense, the increase in assets (or decrease in liabilities) that results from operations. Revenues result from (1) services performed by the federal government and (2) goods and other property delivered to purchasers. Spending Authority As defined by section 401© of the Congressional Budget Act of 1974, as amended (2 U.S.C. 651 (c)), a collective designation for authority provided in laws other than appropriation acts to obligate the government to make payments. It includes contract authority, authority to borrow, and entitlement authority for which the budget authority is not provided in advance by appropriation acts. It also includes authority to forgo the collection of proprietary offsetting receipts and to make any other payments for which the budget authority is not provided in advance by appropriation acts. Spending authority is commonly referred to as backdoor authority or 401© authority. Spending Committee A standing committee of the House or Senate with jurisdiction over legislation permitting the obligation of funds. The House and Senate Appropriations Committees are spending committees for discretionary programs. For other programs, the authorizing legislation itself permits the obligation of funds (backdoor authority). In that case, the authorizing committees are the spending committees. Standard General Ledger Chart of Accounts A uniform listing of accounts and supporting transactions that standardizes federal agency accounting and supports the preparation of standard external reports. Sub-Object Class Sub-object class codes provide the level of detailed information needed for recording and sorting various 149 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 spending transactions and to fulfill external reporting requirements to OMB, GAO, Congress, etc.. All sub- object class codes and definitions fall within the broader scope of the OMB Major Object Class codes. Supplemental Appropriation An act appropriating funds in addition to those in an annual appropriation act. Supplemental appropriations provide additional budget authority beyond the original estimates for programs or activities (including new programs authorized afterthe date of the original appropriation act) in cases where the need for funds is too urgent to be postponed until enactment of the regular appropriation bill. Supplemental may sometimes include items not appropriated in the regular bills for lack of timely authorizations. Surplus • Budget Surplus The amount by which the government's budget receipts exceed its budget outlays for a given period, usually a fiscal year. Sometimes a deficit is a negative surplus. • Total Surplus The amount by which the sum of the government's on-budget and off-budget receipts exceed the sum of its on-budget and off-budget outlays for a given period, usually a fiscal year. Suspense Account A combined receipt and expenditure account established to temporarily hold funds which are later refunded or paid into another government fund when an administrative or final determination as to the proper disposition is made. Transfer Shifting of all or part of the budget authority in one appropriation or fund account to another, as specifically authorized by law. The nature of the transfer determines whetherthe transaction is treated as an expenditure or a nonexpenditure transfer. • Expenditure Transfer A transaction between appropriation and fund accounts which represents payments, repayments, or receipts for goods or services furnished or to be furnished. Where the purpose is to purchase goods or services or otherwise benefit the transferring account, an expenditure transfer/transaction is recorded as an obligation/outlay in the transferring account and an offsetting collection in the receiving accounts. If the receiving account is a general fund appropriation account or a revolving fund account, the offsetting collection is credited to the appropriation or fund account. If the receiving account is a special fund or trust account, the offsetting collection is usually credited to a receipt account of the fund. All transfers between federal funds and trust funds-are also treated as expenditure transfers. • Nonexpenditure Transfer For accounting and reporting purposes, a transaction between appropriation and fund accounts that does not represent payments for goods and services received or to be received but rather serves only to adjust the amounts available in the accounts for making payments. However, transactions between budget accounts and deposit funds will always be treated as expenditure transactions since the deposit funds are outside the budget. Nonexpenditure transfers also include allocations. These transfers may not be recorded as obligations or outlays of the transferring accounts or as reimbursements or receipts of the receiving accounts. For example, the transfer of budget authority from one account to another to absorb the cost of a federal pay raise is a nonexpenditure transfer. Undelivered Orders The value of goods and services ordered and obligated which have not been received. This amount includes any orders for which advance payment has been made but for which delivery or performance has not yet occurred. This term is synonymous with unliquidated obligations. 150 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 User Fee A fee charged to users for goods or services provided by the federal government. User fees generally apply to federal activities that provide special benefits to identifiable recipients above and beyond what is normally available to the public. User fees are normally related to the cost of the goods or services provided. They may be paid into the general fund or, under specific statutory authority, may be made available to an agency carrying out the activity. An example is a fee for entering a national park. From an economic point of view, user fees may also be collected through a tax such as an excise tax. Since these collections result from the government's sovereign powers, the proceeds are recorded as budget receipts, not as offsetting receipts or offsetting collections. In the narrow budgetary sense, a toll for the use of a highway is considered a user fee because it is related to the specific use of a particular section of highway. Such a fee would be counted as an offsetting receipt or collection and might be available for use by the agency. Alternatively, highway excise taxes on gasoline are considered a form of user charge in the economic sense, but since the tax must be paid regardless of how the gasoline is used and since it is not directly linked with the provision of the specific service, it is considered a tax and is recorded as a governmental receipt in the budget. Working Capital Fund A revolving fund that operates as an accounting entity. In these funds, the assets are capitalized and all income is in the form of offsetting collections derived from the funds' operations and available in their entirety to finance the funds' continuing cycle of operations without fiscal year limitation. A working capital fund is a type of intra governmental revolving fund. 151 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 APPENDIX B CHECKLIST of GOOD FUNDS CONTROL PRACTICES 152 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 CHECKLIST of GOOD FUNDS CONTROL PROCEDURES Maintain a Centralized Document Control Record Allowance Holders and FCOs should maintain a document record system which houses copies of all funding documents with their Document Control Numbers, along with budget reports which are used in tracking the status of those funding documents. Prepare Practical Budget Execution Reports Allowance Holders and FCOs should also maintain budget/financial reports which show the current status of funds on all accounts by appropriation, PRC/Object Class. These may be prepared on a monthly, quarterly, or even weekly basis (near the end of the FY). Certify Availability of Funds The Funds Control Officers must certify the availability of funds for every commitment and obligating action and ensure that no spending action will exceed a specific limitation in the Advice of Allowance. (Allowance Holders not budgeting at the RC level should, at a minimum, inform their RCs what their budget is in an operating-plan memorandum). Do Not Exceed Ceilings Allowance Holders must not exceed allowances or certain object class ceilings, i.e., travel, Superfund functional, and FTE ceilings. Allowance Holders should never assume that additional resources orworkyears will be reprogrammed to their allowances if they exceed a resource ceiling. Commit Funds in IFMS Allowance Holders and FCOs are required to enter all commitments into the agency Integrated Financial Management System (IFMS) on a timely basis, and ensure that the funds will not be altered or withdrawn prior to obligation without advance notice to the proper obligating official. Spend Evenly Throughout the Year Allowance Holders should ensure that their funds are spent evenly throughout the fiscal year. They should avoid last minute year-end spending. Anticipate Reprogrammings Allowance Holders should anticipate reprogramming requests in advance and submit them to the Budget Division on a timely basis. Reconcile with IFMS Funds Control Officers should reconcile their funding documents on a regular basis with IFMS to ensure all documents have been fully liquidated (paid), and resolve any discrepancies accurately and as quickly as possible. Develop and Maintain Standard Operating Desk Procedures Allowance Holders and FCOs should prepare written procedures indicating specific steps to be followed to implement the activities specified in this directive. These procedures should describe how to do the daily funds control activities when the AH or FCO is out of the office. Several examples of SOPs include: • How funding documents, such as Purchase Requests (PRs), Bankcard transactions, and Working Capital Fund Service Agreements are processed within the office; • How Travel-related documents, such as Travel Authorizations and Vouchers, are processed; • How often monthly funds status reports and financial reconciliations are conducted; • Where to find the latest status of funds report (ie. what documents have been obligated and which ones are still committed), how to run FDW reports, and where to find copies of current funding documents. Delegate Authority Allowance Holders should identify, in writing, their Funds Control Officer and designated backup. 153 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 APPENDIX C SUGGESTED FCO JOB QUALIFICATIONS and TRAINING 154 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 Suggested Funds Control Officer (FCO) Job Qualifications and Training A prerequisite to enhancing human resource development is the establishment of core competencies for individuals who work in federal financial management. While there are currently no specific and/or formal job qualification standards and training requirements for an EPA Funds Control Officer, the following requirements are recommended for sustaining and developing the career growth of an FCO: COMPETENCIES Basic knowledge of Federal budget and accounting principles, policies, and procedures sufficient to understand their relationship to allotments, financial plans, allowances, commitments, and obligations. Knowledge of public laws and the legal requirements placed on appropriations, as well as OMB circulars/bulletins and Agency directives/policies governing the budget process. Knowledge of Agency's financial systems and internal controls sufficient to retrieve financial information to monitor and reconcile all funding documents, and prepare status of funds reports for all program accounts. Knowledge of OMB and Agency Object classes, Agency account coding, and document flow. Knowledge of Agency's budget operations and processes and how obligations and expenditures are incurred for assigned program areas. Knowledge and ability to certify the availability of funds from within the assigned allowance(s), and procedures used in requesting the reprogramming of funds. TRAINING D Principles of Federal Appropriations Law course D Federal Budget Process course D Federal Budget Execution course D Office of Budget's Basic Budget Execution course D Office of Acquisition and Management's Purchase Card training class D Administrative Control of Appropriated Funds course _1/ D Basic computer applications for spreadsheets and writing D Effective Communication (oral and writing) course NOTE: 1- Proposed internal Agency course for individuals assigned the position of FCO. Authority to certify the availability of funds will be contingent upon the successful completion of this course once it becomes available. 155 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 APPENDIX D FREQUENTLY ASKED QUESTIONS (FAQs) 156 ------- BUDGET EXECUTION FREQUENTLY ASKED QUESTIONS (FAQs) INDEX FAQ #: TOPIC A^ REPROGRAM MINGS: A1. BUDGET REPROGRAMMINGS TO BE APPROVED A2. "DEFACTO REPROGRAMMINGS" A3. EMERGENCY REPROGRAMMINGS A4. ENSURING THAT MY FUNDS ARE ISSUED AT THE RC LEVEL A5. ERROR MESSAGE "INSUFFICIENT RESOURCES" A6. FTE REPROGRAMMINGS A7. IFMSSUSF TABLE A8. JUSTIFICATIONS A9. LINE LIMITATION A10. LIST OF VALID PROGRAM RESULTS CODES (PRCs) A11. OPENING "BUDGET BUCKETS A12. RESPONSIBILITY CENTER (RC) LEVEL IFMS TABLES A13. RP VS AN RR REPROGRAMMING DOCUMENTS A14. (SALC) LEVEL IS NEGATIVE IN IFMS A15. STATUS OF A REPROGRAMMING DOCUMENT A16. TRANSFERRING RESOURCES TO ANOTHER RPIO A17. VIEWING "HARD ERROR" REPROGRAMMING MESSAGES B. CONTRACTS: B1. MOVING FUNDS BETWEEN CONTRACT OPTIONS B2. OVERRUNS B3. SPLIT-FUNDING OBLIGATIONS C. GRANTS: C1. DIRECT IMPLEMENTATION C2. "IN-KIND" GRANTS C3. MOVING FUNDS BETWEEN GRANT BUDGET PERIODS D. TRAVEL D1. INVITATIONAL TRAVEL ORDERS D2. PROCUREMENTS FOR LODGING AND SUBSISTENCE D3. SITE-SPECIFIC TRAVEL D4. TRAVEL OR TRAINING FOR THE NEXT FISCAL YEAR E. GENERAL: E1. OGC OPINIONS ON USING APPROPRIATED FUNDS TO PAY FOR MEALS AND REFRESHMENTS AT CONFERENCES AND MEETINGS E2. ADMINISTRATIVE VS. PROGRAMMATIC WCF E3. ITEMS PROVIDED TO THE PUBLIC E4. OPEN COMMITMENTS FUNDED WITH 2 YEAR APPROPRIATED FUNDS E5. SELECTING SUB-OBJECT CLASS CODES E6. SUB-OBJECT CLASS CODE FOR I PAS E7. VIEWING DEOBLIGATIONS IN IFMS E8. VIEWING YEAR-END CARRYOVER BALANCES IN IFMS E9. POLICY AND PROCESS TO CHANGE A PROGRAM RESULTS CODE ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 A. REPROGRAMMINGS: A1. How long does it take budget reprogrammings to be approved? Once a reprogramming document is entered into IF MS and 1st level approval is applied, the Office of Budget (OB) Control Team will pull and review that document the following morning. The analyst will either process the document immediately or, if necessary, submit it to the appropriate OB staff for review. The OB staff has 3 days to review, approve, and return the document to the Control Team for action. OB strives to process most reprogrammings in 5 work days. This time frame will expand if: 1) the reprogramming does not clearly state the impact to both the gaining and losing program results code (PRC) (see next FAQ); 2)the reprogramming purpose is not clear, or 3) if there are policy issues or data entry errors. Recertification requests and requests for additional administrative or travel ceiling will take longer as additional research and/or review of RPIO spending patterns may be needed. Reprogrammings requesting reimbursable allowances are processed once a week. A2. What is a "defacto reprogramming"? What do I do to prevent them? A defacto reprogramming is created when an AH commits and/or obligates funds in excess of a goal/objective in their Operating Plan. In effect they have already reprogrammed and spent the funding without bothering to actually process a reprogramming. Since we have an annual Congressional Reprogramming Limitation for goal/objectives for which we must monitor, defacto reprogrammings bypass the automated controls in IFMS which help to do this and pose a risk to the Agency. Defacto reprogrammings are corrected by decommitting and deobligating funds or by processing the reprogramming that should have been done first. Defacto reprogrammings are prevented by processing a reprogramming in advance of committing and obligating funds. A3. How can I get a reprogramming which needs to be processed on an emergency basis approved more quickly than 3 workdays? A regular dialog of communication should exist between the requestor and the budget analyst processing the requests. An expressed need for priority consideration will be taken seriously if it does not become a habit. To request OB to process a reprogramming on an "emergency" basis, the requestor should call their control team analyst or the control team leader. A4. My RPIO operates at the "RC" level. I receive resources often from other RPIOs and the resources are issued to me at the allowance level. Why do I have to continue processing reprogramming documents to move my funds from the allowance level to the SUB-allowance (RC) level. Who's responsible for ensuring that my funds are issued at the RC level? It is the responsibility of the RPIO issuing resources to your RPIO to ensure that you receive your funds at the RC level. They should contact you for the information & include it in the reprogramming document...otherwise substantial delays may occur. A5. I entered a reprogramming and received an error message stating there are insufficient 158 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 resources at the Sub-Allotment (SALC) level. What does that mean? This is the funds control lockout level in IFMS. When reprogramming resources, you must have an available unobligated/uncommited balance at the AH/Appropriation (SALC) level. If not, IFMS will not process the document. A6. How do I reflect FTEs on a reprogramming document? As a numeric with two decimal places (e.g. 1.00) - FTE budget level = F A7. How long do reprogrammings remain on the IFMS SUSP table? Once processed, they should remain for 7 days; during peak periods (September) this may be reduced to 5 days. Documents that have rejected remain until deleted by the Program office. OB may clean up old reprogrammings once or twice a year. After they ha ve been processed and are no longer on SUSF, header and line information can be viewed on IFMS tables RPGH and RPGL respectively. A8. How should a reprogramming justification be properly written? FCO's must ask the person in their office who is initiating the reprogramming action for sufficient details to provide an adequate justification. A well written, informative purpose statement is necessary for approval of the reprogramming document. Reprogramming justifications provide the permanent audit trail of EPA's resources and protection for the initiator whose rationale is documented. Reprogramming justifications should simply state: 1.) what the action achieves for the program(s) oroffice(s) receiving an increase and, 2.) what the impact is to the program(s) or office(s) losing resources. We can't accept acronyms in justification unless it is a universal known acronym. As part of the IG audit, it was determined that many justifications are too vague and not understandable. In order to correct this problem, the Budget Control Team is requiring that justifications be explicit. For more on how to write a reprogramming justification, see Exhibit 2520-3-4 in the main chapters of the Administrative Control of Appropriated Funds (funds control manual). A9. What is the reprogramming document limitation on the number of lines permissible on one reprogramming? You should never exceed 13 lines (from and to total) on the line screen. A10. I don't know the correct Program Results Code (PRC). Which IFMS table can I access to view the list of valid program results codes? The IFMS 'PGMT table provides a listing of all valid program results codes. A11. What about opening "budget buckets"? Before IFMS opens for reprogrammings at the start of the new fiscal year, how can we commit funds in a BOC that has not yet been established in our AH? You must request that the OB open the BOC and you must justify this action. We encourage everyone to establish all anticipated BOC addresses in their initial 159 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 development of the Operating Plan to avoid this delay. A12. My office operates the Responsibility Center (RC) level. Which table is available in IFMS to reflect the Operating Plan and/or status of resources? The "SAIN"and "SASP" tables are available reflecting your operating plan, obligations, available balances etc. RCBT table shows resources rolled up to the RC level (w/o BOCorPRC). A13. When do we use an RP vs an RR document on reprogramming? The RR transaction is primarily for program offices to move resources within their own RPIO. All RR transactions require an approval by a Reprogramming Approval Official within each RPIO. In general, RR transactions do not require approval by OB. However, reprogrammings that affect ceilings and floors or that are greater than $250,000 do require OB approval. The RP transaction is used for reprogrammings across RPIOs, to and from the OB (for taps and increases), for Congressional Add-ons and for recertified funds and carryover funds. All RP transactions require OB approval. A14. My AH/Appropriation (SALC) level is negative in IFMS. How can that happen with a lockout and what do I do to correct it? The only thing that IFMS will not lock out are payroll charges being loaded from the payroll sub-system because these are legal liabilities that have already been earned by the employee. You have now exceeded your allowance. First, you should check that your pay roll was processed correctly. If it is correct, you will need to either decommit ordeobligate some other item in your allowance orreprogram funds to this allowance from another AH in your RPIO, if possible. If you choose to reprogram funds, this action will be evaluated against the Congressional Reprogramming Limitation. A15. Where can I find the status of a reprogramming document without having to contact the OB? It is important for users to understand how to read and follow the status of reprogramming requests on the suspense file IFMS table (SUSF) and we strongly encourage you to check SUSF before calling the OB. SUSF shows the status of documents as being either held, approved, deleted, etc. A16. I am transferring resources to another RPIO, which document should I use? When transferring out of or to a different RPIO, you must always complete the "RP" document, not the "RR" document. A17. Which IFMS table should you reference if you see a "hard error" message on your reprogramming document? The "ERRG" table deciphers all hard error messages, except for the absence of "to" and "from"lines, when appropriate, a "hard error" message should always be corrected 160 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 before forwarding your document to OB for review/approval. OB cannot process your document through IFMS unless these errors are resolved. B. CONTRACTS: B1. Do I have to recertify funds with the Office of Budget(OB) when moving funds between contract options or base and option periods? For unexpired appropriations, recertification is not required by the OB when shifting funds between a contract base and its option periods or between contract option periods. However, these offsetting transactions are legal deobligations and reobligations and do require apportionment recovery authority. As such, they will be recorded and maintained in the formal IFMS sub-system called the Contracts Payment System (CPS). The offsetting CPS entries, which net to zero, will not impact IFMS budget tables or create temporary fluctuations to budget balances. The OB will monitor overrun/recovery activity through IFMS reports to ensure that OMB apportionment authority is not exceeded. For more information, search on Recertification of Funds in the main chapters of the Administrative Control of Appropriated Funds (funds control manual). B2. Our office has an overrun. Who is supposed to pay for it? Ultimately, the Allowance Holder is responsible. GAO defines overruns as "upward adjustments to recorded obligations". For the purposes of funds control, the term "overrun" will be used by the OB to encompass all additional legal liabilities that the Agency did not record correctly in IFMS. These may occur for any number of reasons which include but are not limited to: unauthorized procurements, unrecorded obligations, obligations deobligated in error, price changes, cost-rate adjustments, final audit billings, court or other claims (such as Equal Access to Justice legal costs), payroll adjustments, etc. Generally, overruns (if true legal liabilities) are posted to the original accounting data that was charged initially. If initially unrecorded, it should be charged to the accounting data of the benefitting office where the goods or services were received and where the liability was created. The OB may exercise its authority to take any of five distinct actions relating to overruns or recoveries based on the circumstances, timing, and amount of the transaction. The five distinct actions are: a. net out overruns against offsetting recoveries, b. require a Program Office to cover the overrun from their current allowance in the event that Agency policy was violated; c. recertify recovered funds back to the Allowance Holder; d. withhold recovered funds to offset overruns, or fund a new initiative or high priority at the discretion of Agency Management; or; e. cover overruns from a Centrally Managed Allowance; For more information, search on Overruns/Recoveries in the main chapters of the Administrative Control of Appropriated Funds (funds control manual). 161 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 B3. Can I split-fund contractual obligations using multiple appropriations and what are the general rules I need to follow? This is a complicated issue. EPA receives funding from several appropriations and may fund a spending action from one or more of these appropriations on a single work assignment, delivery order, or project depending on the nature of the goods or services provided. [See the discussion in Chapter 9 of the Contracts Management Manual for specific information on this topic.] Allocation of funding must be based on appropriation benefit, rather than which account can "afford" the work. Additionally, the use of funds from one appropriation because of the absence of funding in another violates basic appropriation law. For more information, see the Split Funding with Multiple Appropriations section in the main chapters of the Administrative Control of Appropriated Funds (funds control manual). C. GRANTS: C1. How does the Regional Office charge costs when doing direct implementation of a federal program required by law in the absence of an acceptable state or tribal program? This refers to the direct implementation by the Federal Government of a program required by law in the absence of an acceptable State or tribal program. Typically, EPA directly implements a federal program through the use of contracts. Therefore, funds for such contracts will need to be reprogrammed between budget object classes (BOCs) from grants (BOC 41) into contracts (BOC 37) and/or expenses (BOC 36). Since the contracts & expenses are associated with program grants, using the programmatic sub-object classes in each series will ensure that these costs will not be reflected as administrative costs. Since there are no PC&B or travel funds appropriated in the STAG account, any direct implementation payroll or travel needs in the Regions must be funded from within existing resources in the EPM account. For more information search on direct implementation in the main chapters of the Administrative Control of Appropriated Funds (funds control manual). C2. How do I budget or reprogram for "in-kind" grants to states and tribes and what are the general rules I need to follow? According to the EPA Grants Administration Division which administers and processes the "in-kind" grants feature, funding remains in the grants BOC (41) and are not reprogrammed. Under this approach, if it would be more efficient, in terms of cost or time savings, for EPA to purchase allowable equipment or services instead of a grantee, EPA may acquire the equipment or services with funds from the grantee's allotment. The equipment or services may then be provided to the grantee under the assistance agreement along with the remainder of the grantee's allotment. A purchase request is attached to the grant award and "in-kind" box is checked on the award package. However, in addition to the requirement that there be a savings in cost or time, the equipment or services provided under the in-kind grant feature must benefit the grantee. ..not EPA. For more information, contact the Grants operations Branch at (202) 564-5376 C3. Do I have to recertify funds with the Office of Budget (OB) when moving funds between grant budget periods? 162 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 For assistance agreements such as grants (including STAG State grants) and cooperative agreements, recertification is not required by the OB when funds from one budget period are made available in a subsequent budget period through the execution of a continuation award [deobligation and immediate reobligation transactions can be processed in IFMS to accommodate the minor changes in obligating document numbers, if necessary]. Depending upon the type of agreement, this is usually permissible as long as the scope of work remains unchanged and the appropriation has not expired. D. TRAVEL: D1. Who can we invite to EPA sponsored events and have EPA pay for their travel under invitational travel orders? The rules for invitational travel orders state that eligibility is met when a non federal individual is requested to meet with federal officials to confer on a matter of official business because of his/her knowledge, capability, or experience and is otherwise providing a direct service to the agency. This direct service provision must be met in order to pay travel expenses for an invitational traveler. Invitational travel orders may not be used for individuals merely attending a meeting without providing a direct service to EPA. Some examples of acceptable invitational travel include: 1. witnesses without pay 2. consultants/experts 3. attendants of disabled employees when traveling 4. federal advisory committee members 5. speakers at EPA conferences In addition to the "invitational travel" statute, other laws may authorize EPA to pay for non federal tra vel. For example, EPA may pay for tra vel expenses of guests of Agency employees at awards ceremonies as a "necessary expense" under the Government Employees Incentive Award Act, 5 USC 4501-4507. The guests must by related to the employee by blood or affinity whose close association is equivalent to a family relationship. Further, Section 206 of the Federal Employee Pay Comparability Act, 5 USC 5706b, provides specific statutory authority for certain pre-employment travel expenses relating to interviews. Travel authorized under these statutes is not an entitlement but can be paid for at the discretion of the Agency. For additional information, see 25506, Chapters of the Resources Management Directive System (RMDS) which can be accessed online at the following URL address: http://intranet. epa.gov/ocfo/policies/policies. htm D2. Must travel funding be used for procurements for lodging and subsistence? Unless it is for training, yes For meetings and conference subsistence, charging to tra vel sub-object class 21.35 is necessary to ensure that these charges properly accrue to the Agency's travel ceiling. For more information search on the sub-object class listings on-line at: (http://intranet.epa.gov/budgpage/policy/rmds2590.pdf). D3. What appropriations have exemptions from travel ceilings for site-specific travel? 163 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 Historically, exemptions from travel ceilings for site-specific travel exist in the Hazardous Substance-Superfund, Hazardous Substance Research (S&T), and Office of Inspector General appropriations. These exemptions have either been by Congressional statute or by Agency policy developed in consultation with the Congressional Appropriations Committees. Other appropriations which may have sites, such as LUST and Oil Spills, have not attained this exemption. Therefore, any site travel in the LUST and Oil Spills appropriation must be charged to the travel ceiling. Tra vel ceilings are imposed by Congress to prevent government travel abuse and apply to all accounts with funds in the travel object class. They are based on travel budget estimates included in EPA's President's Budget Request and are subject to change by the Congress. When enacted, the Appropriations Act includes a General Provision (Section 401), which states that expenditures for travel expenses may not exceed the amounts set forth in the budget estimates (i.e. President's Budget Request) submitted for the appropriation...in other words...a ceiling limitation. D4. Can I obligate funds in September for travel or training that will not occur until the new fiscal year? If the funds are not expiring, the end-of-year process should not interrupt the normal commitment, obligation, and disbursement steps for funding these items. If the funds are expiring, an obligation for something that will occur beyond the life of the appropriation is subject to the bona fide needs rule. Briefly stated, fiscal year appropriations may be obligated only to meet a legitimate, or bona fide, need arising in, or in some cases arising prior to but continuing to exist in, the time period for which the appropriation was made. As an example, for travel or training, if the lead time or scheduling requires you to obligate before the end of the fiscal year, then the bona fide needs rule will have been met. For more information search on the bona fide needs rule in the main chapters of the Administrative Control of Appropriated Funds (funds control manual). E. GENERAL: E1. What are the rules on when an office can/can't use agency appropriated funds for paying for meals and refreshments at agency-sponsored meetings, conferences, training workshops, and award ceremonies? The Ofice of General Counsel (OGC) maintains a list of Frequently Asked Questions (FAQs) pertaining to the use of appropriated funds to pay for meals and refreshments at Agency sponsored meetings, conferences, training workshops, and award ceremonies: See http://intranet.epa.qov/oqc/memos.htm E2. Which Working Capital Fund (WCF) services are administrative and which are programmatic? In the main chapters of the Administrative Control of Appropriated Funds (funds control manual), there is a special subject item (Chapter 4(1)(3) which provides many examples of "Administrative" vs "Programmatic" costs by object class series. Some ADP equipment examples include: ADMINISTRATIVE 164 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 Purchase of General Purpose ADP Software Packages Individual Desk-top Equipment (such as Calculators), Personal Computers or Other Word Processor Equipment for General Staff Use (Such as Local Area Network (LAN) Equipment) PROGRAMMATIC Programmatic ADP Software Packages (such as: Toxic chemical composition analysis programs - LHASA, SYNGEN, CAMEO; chemical property estimation programs - CLOGP & PC GEMS; SAS & SAS-Graph software when used for generating research lab. data, etc.) Programmatic ADP Software Disk Update ADP Equipment for Programmatic Databases such as: Storet, Haz. Wst.DMS, New Air Data Sys. Docket Sys., Pest Product Info. Sys., CERCLIS, etc. E3. What types of items can we provide to the public at EPA sponsored events? In a 1992 Comptroller General Decision (B-247686), GAO opined that EPA's expenditure for buttons and magnets inscribed with environmental messages was a proper use of appropriated funds since the items are intended to convey a message related to EPA's mission. They cited EPA authorization under the Environmental Education Act as the basis for this decision. Since that time, similar such items have been disseminated at Earth Day festivities and other opportune instances of public awareness and education using the same authority. In the absence of specific authority, however, an agency may not purchase items for distribution as gifts or souvenirs to the public. GA O had previously opined that expenditures for key chains, ice scrappers, and miniature novelty garbage cans containing candy, as having a real use other than to convey a message were not a proper use of appropriated funds. Items without specific authority would be subject to the "necessary expense rule" which allows the Agency "reasonable discretion in determining how to carry out the objects of the appropriation." Additional information can also be found by searching on the Necessary Expense Rule excerpts in the main chapters of the Administrative Control of Appropriated Funds (this Manual). E4. What will happen to open commitments funded with 2 year appropriated funds at the end of the first year (i.e., EPM and S&T)? The commitment reversal process will not affect commitments funded with two-year appropriated funds. Those commitments will remain open in IF MS until obligated or the appropriation expires which ever comes first. E5. How do I find the correct sub-object class code for obligating a particular item? Use the sub-object class listings on-line in intranet and search the package for your specific item (e.g. "lodging"). If the search feature does not find the specific item when it searches both the OMB general headings and the EPA definitions, you will need to look for a more general category that includes similar type items. Search the sub-object class listings on-line at: (http://intranet.epa.gov/budgpage/policy/rmds2590.pdf). E6. What is the proper sub-object class code for IPAs? 165 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 Other than for Commissioned Officers (for which there are 5 sub-object class listing), the correct code and definition reads as follows: 11.83 Intergovernmental Personnel Act (IPA) Salaries - Non-Ceiling. Salary paid to an EPA employee on an Intergovernmental Personnel Act assignment where EPA pays less than 50% of the employee's salary. If the EPA pays 50% or more of the employee's salary, it is charged to the Agency's regular PC&B sub-object classes. E7. Where do I look in IFMS to verify that my deobligations has been processed? You should pull up the IFMS table called GLDB and look under general ledger (GL) account 4801 or 4802. E8. Is there a place in IFMS to see year-end carryover balances? IFMS tables FALC (ALOC), FSAL (SALC), FALT (ALLT) show budgets, spending and available amounts by fiscal year. E9. What is the change policy and process someone must go through in order to make a change to a Program Results Code (PRC) such as adding or changing the PRC Activity Codes? Program Results Codes (PRCs) were established to account for and relate resources to the Agency's Strategic Plan goals and objectives, national program offices and responsibilities, and governmental functions. PRCs are created when the annual EPA Budget is submitted to Congress each February and then formally established in IFMS with the enactment of EPA's appropriation act. PRCs may be updated at any time. To ensure that all PRCs are justified and properly relate to the Agency's Strategic Plan, national program and responsibilities, and business functions, the following policy and procedures were established. These policy and procedures were established to ensure all Agency organizations involved in a PRC change request are consulted and all Agency documentation and systems are revised to account for the PRC change. Therefore, all requests to change PRC Codes will be reviewed for prog ram budget relevance (by the affected NPMs) and for Agency accountability (by the OCFO). EPA Policy A (PRC) be ONLY after it 1. recommended by the appropriate NPM; 2. approved by the Office of Budget; 3. included in the Program/Project Description Book; and 4. included in the IFMS PMGT Table. This policy includes requests to add Agency Activities to existing PRCs. 166 ------- RESOURCES MANAGEMENT DIRECTIVES 2520 ADMINISTRATIVE CONTROL OF APPROPRIATED FUNDS 01/15/08 EPA Procedures To the Requests for PRO changes must be submitted by an RPIO to the affected NPM. The PRO change request should include: a. what PRO change is requested; b. why the change is requested; c. circumstances surrounding this change (e.g., pending obligation); d. narrative changes needed to the Program/Project Description Book. 2. NPMs will review the PRO change request and submit approved requests to the Office of Budget (Policy Team). 3. Office of Budget (Policy Team) will coordinate review of the PRO change request within the Office of Budget (e.g., media analysts). 4. Office of Budget (Policy Team) will notify affected NPMs of the decision or status of their PRO Change Requests as soon as possible See also: http://intranet.epa.qov/ocfo/policies/prc/fv04 chanqerequests.htm 167 ------- |