MS 704: Adminstrative Control of Funds

Date: 4/27/84 v.2
Office: M/PH
Supersedes: MS 612, 6/14/73


1.0	Purpose
2.0	Scope
3.0	Background
4.0	Definitions
5.0	Apportionments
	5.1	Preparation
	5.2	Submissions
	5.3	Reapportionment
6.0	Allotments
	6.1	Limitations
7.0	Operating Budget Advice
8.0	Country Budgets
9.0	Relationship to Accounting System
10.0	Violations
11.0	Report of Violations
	11.1	Responsibility of Chief Financial Officer
	11.2	Responsibility of Peace Corps Director
12.0	Deferrals and Rescission Proposals
13.0	Other Funds
14.0	Monitoring Operating Budgets
15.0	References
16.0	Effective Date

Attachments

Attachment A

Administrative Control of Funds Statement (pdf)

1.0 Purpose

Section 1517 of Title 31 of the U.S. Code (part of The Anti-deficiency Act) and Office of Management and Budget (OMB) Circular A-34 require the head of each Executive Agency, subject to the approval of OMB, to prescribe, by regulation, a system of administrative control of funds. The Peace Corps has established a system of financial control to meet this requirement. The purpose of this system is to:

Restrict obligations and expenditures against each appropriation or fund to the amount of appropriations, apportionments or reapportionments, and
Enable the Director of the Peace Corps to fix responsibility for over obligations and over-expenditures of appropriations, apportionments, and allotments subject to the Anti-deficiency Act as well as violations of non-statutory restrictions and requirements.

2.0 Scope

The provisions of the Manual Section apply to all Peace Corps employees with responsibilities for administering, controlling and/or otherwise overseeing obligations and expenditures of funds.

This Manual Section is designed to restrict obligations and expenditures against each appropriation or fund to the amount of the Operating Budget Advice, allotment, apportionment or reapportionment. It enables the Peace Corps Director to fix responsibility for the creation of unauthorized obligations or expenditures and for any obligation or expenditures in excess of an apportionment, allotment or budget advice amount.

3.0 Background

The Peace Corps' system of administrative control of funds has been established under the authority of, and consistent with, the requirements of:

The Anti-deficiency Act (31 U.S.C. §1341, §1342, §1350, §1351 and §1511-1519)
The Budget and Accounting Act of 1921, as amended (31 U.S.C. §1104)
Section 1311 of the Supplemental Appropriations Act of 1955 (31 U.S.C. §1108, §1501 and §1502)
The Congressional Budget and Impoundment Control Act of 1974 (31 U.S.C. §681-688 and §1102)

The Peace Corps' system of administrative control of funds applies to all funds or appropriations available to the Agency.

4.0 Definitions

The terms used in this Manual Section are defined below. A more complete set of definitions of financial management terms is included in Manual Section 701, "Government Budget and Accounting: Introduction to Federal Government Financial Management," and the Office of Management and Budget (OMB) Circular A-34, "Instructions on Budget Execution."
Allotment - A delegation of authority by the Director of an Agency to authorized official(s) to incur obligations within specified amounts. Allotments are made in accordance with the requirements of OMB Circular Number A-34, "Instructions on Budget Execution." Overspending of this allotment is answerable to Congress under the Anti-deficiency Act.
Allottee - The individual who, because an allotment has been issued to him/her, is subject to the provisions of the Anti-deficiency Act, Section 3679 of the Revised Statutes as amended (31 USC §1341).
Anti-deficiency Act - A Federal law created by Congress to prevent the incurring of obligations or the making of expenditures (outlays) in excess of amounts available in appropriations or funds, to fix responsibility within an Agency for the creation of any obligation or the making of any expenditure in excess of an apportionment or reapportionment or in excess of other subdivisions established, and to assist in bringing about the most effective and economical use of appropriations and funds.
Apportionment - A distribution made by the Office of Management and Budget (OMB) of amounts available for obligation, including budgetary reserves established in accordance with the law, in an appropriation or fund account. Apportionments divide amounts available for obligation by specific time periods (usually quarters) and activities. The amounts apportioned limit the amount of obligations that may be incurred.
Appropriation - Legislation enacted by Congress establishing budget authority for an Agency.
Deferrals of Budget Authority - Temporary withholdings of budget authority. Deferrals cannot extend beyond the end of the fiscal year.
Foreign Currency Fund Accounts - Accounts established in the United States Treasury for foreign currency that is acquired without payment of United States dollars, primarily in payment of commodities (such as the Host Country Contributions), and that may be expended with or without charge to dollar appropriations. (See MS 727, "Use of Foreign Currencies.")
One Year Account - An appropriation that is available for incurring obligations only during a specific fiscal year.
Operating Budget Advice - The authority delegated by the Director permitting each office within Peace Corps to incur obligations and make expenditures within a specified amount during a specific period of time.
Rescission - Enacted legislation canceling budget authority previously provided by the Congress, prior to the time when the authority would otherwise lapse.
Trust Fund Expenditure Accounts - Appropriation accounts established to record specific amounts of trust fund receipts to be used to finance special programs under a trust agreement or statute.
Trust Fund Receipt Accounts - Accounts credited with collections generated by the terms of a trust agreement or statute. These collections are presented in the Budget of the United States Government either as budget (governmental) receipts or offsetting collections. Peace Corps trust funds have indefinite authority. (See MS 726, "Trust Funds and Foreign Currency Accounts.")

5.0 Apportionments

Requests for apportionment are prepared by the Office of Planning, Budget and Finance (OPBF) and submitted to Office of Management and Budget (OMB) by the Chief Financial Officer. Of the funds and appropriations available to the Peace Corps for obligation, only the Operating Expenses account is currently required to be apportioned.

5.1 Preparation

Apportionment requests will be prepared by the Planning and Budget Division (OPBF/PB) in accordance with OMB Circular A-34. The apportionment request will be based on a comprehensive and detailed operating plan, reflecting policy guidance from OMB and any legal limitations imposed by Congress. It will be based on a careful analysis of the nature of the obligations to be incurred under the work programs or operations planned for the year. The apportionment request will take full account of seasonal variations in the Peace Corps' pattern of obligations.

5.2 Submissions

Initial apportionment requests will be prepared in accordance with OMB instructions and will be submitted with a proposed operating plan within 10 calendar days after the approval of our appropriations act or by August 21, whichever is later. Ordinarily, budgetary resources available through a continuing resolution are not apportioned.

5.3 Reapportionment

During the year, OPBF will carefully monitor progress against the operating plan, including:

rate of obligations,
program requirements, and
cost factors.

This will determine if a reapportionment is required.

In the event that a reapportionment is required, a request will be prepared by OPBF and submitted by the Chief Financial Officer to OMB in sufficient time to allow action by OMB before revised amounts are needed for obligation.

6.0 Allotments

The Peace Corps' allotment system is used for all funds and appropriations available to the Peace Corps including those exempt from apportionment. Budget authority obtained through continuing resolutions is controlled through the allotment system even though it is ordinarily exempt from apportionment. Allotments are reflected in the operating plan.

Allotments are issued to an allottee designated by order of the Agency Director. The allottee is the Chief Financial Officer. To tighten funds control sub-allotments are established. The allottee is designated at the highest possible organizational level consistent with effective and efficient management. The allotment and sub-allotment holders are listed in Attachment A. Allotments and sub-allotments represent authority to incur obligations and make expenditures.
Through the allotment process, statutory responsibility is placed on the allottee to ensure that obligations are not incurred and expenditures are not made in excess of the allotment. The Chief Financial Officer is responsible for ensuring that allotments are not made in excess of amounts available through apportionment and that allotment of unrealized reimbursements is restricted to amounts where there is a reasonable assurance that such amounts will be earned and collected.
A separate allotment to each allottee or sub-allottee is made for each fund or account. For operating expenses, the allotment is apportioned into four fiscal quarters. Unobligated balances from one quarter are immediately available for obligation in subsequent fiscal quarters. Amounts included in the allotment for advances and reimbursements are available for obligation only to the extent that orders have been received from within the government which represent valid obligations of the ordering account.

6.1 Limitations

The Director of the Peace Corps may, from time to time, impose special limitations on the manner or purposes for which funds can be obligated by the allottee. These limitations are imposed either to meet some restriction imposed by Congress or the Office of Management and Budget (OMB), or to allow tighter control to be maintained over the Agency's programs. Unless otherwise specified, all limitations are imposed on obligation of authority on a yearly basis.

7.0 Operating Budget Advice

The Allottee or sub-allottees if otherwise authorized to do so, may delegate to lower level officers authority to incur obligations and make expenditures. The Allottee or sub-allottees may not, however, delegate statutory responsibility for adherence to the controls imposed by the Anti- deficiency Act.
The delegation of authority to incur obligations and make expenditures is accomplished through the issuance of Operating Budget Advices. Such advices are reflected in the operating plan. The advices are issued by the Chief Financial Officer based on operating budget levels approved by the allottee.
Operating Budget Advices are issued to the Office Director of each staff office, each Regional Director, and each Associate Director. Operating Budget Advices specify the total obligation authority by budget activity and by quarter for each office with each budget activity, and separate amounts are shown for direct and reimbursable programs. In addition, any limitations placed on the Agency or the allottee will appear on the advices. The Chief Financial Officer is responsible for ensuring that the total of the direct or reimbursable obligation authority or the limitation amounts delegated through the Operating Budget Advices does not exceed the amount available to the allottee.

Authority to obligate trust funds or foreign currency accounts is also delegated through Operating Budget Advices. These advices specify the amount of delegated authority to obligate and the purpose. These amounts remain available until obligated or withdrawn regardless of fiscal year.

8.0 Country Budgets

Budgets are issued to each country by the appropriate Director of Regional Operations (Africa, Inter-America or Pacific, Asia, Central Europe and Mediterranean). The issuance of country budgets represents a re-delegation of the obligation authority (delegated to the Regional Operations Director by the Chief Financial Officer through the Operating Budget Advice) to each Country Director. Country budgets are also reflected in the operating plan.
Regional Directors are responsible for ensuring that the total of the Country Budgets and regional headquarters budget does not exceed the amounts available to the region for obligation in any budgetary category. Copies of Country Budgets will also be provided by the Regions to the State Department or Peace Corps finance office providing fiscal support to the country.

9.0 Relationship to Accounting System

The Administrative fund control system is fully integrated with the Peace Corps' accounting system and generates monthly reports against the operating plan. The accounting system also records and reports data on a cost basis against budget categories as an aid to funds control. Obligations and disbursements are entered into the Agency accounting system by the Financial Services' Accounting Operations (OPBF/F/AO) in Peace Corps headquarters, the domestic service center office, and by the State Department Budget and Fiscal Offices overseas. The system requires that administrative budget holders, and others, submit appropriate information to the budget and fiscal offices accurately, completely, and promptly. Recording of obligations will never be delayed because of insufficient funds. Recording must be based on proper documentation in accordance with 31 U.S.C. §1501 entitled, "Documentary evidence requirement for Government obligations," and Manual Section 701, Attachment A.

Each month, the Status of Funds Report is sent to each budget holder. This shows:

The amount obligated during the month in each budget category, and
The cumulative amount obligated year-to-date in each budget category.

Each month, reports on budget execution, together with more detailed reporting against the financial plan, are submitted to Office of Management and Budget.
Operating budget holders should maintain records to ensure that, at any given time, funds are available prior to incurring obligations. Such records should be reconciled to the automated accounting reports every month to ensure the accuracy of both manual and automated records.

Detailed instructions on the maintenance of records and their periodic reconciliation are contained in Manual Section 705, "Record Keeping and Periodic Reporting." In addition, reported balances must be reconciled with supporting documents periodically and at the end of each fiscal year in accordance with Agency close-out requirements; i.e., the "1311 Review" of open obligations.

10.0 Violations

Reportable violations of the Anti-deficiency Act (31 U.S.C. §1511-19) and OMB Circular A-34 include:

Obligation or disbursement in excess of the amount available within an appropriation.
Obligation or disbursement in excess of the amount available within an apportionment, and making allotments in excess of the amount of apportionment.
Obligation or disbursement in excess of the amount available within an allotment.
Obligation or contract for payment of money for any purpose in advance of appropriations made for such purpose, unless specific advice to the contrary is given by the Chief Financial Officer. (See Manual Section 707, "Continuing Resolutions and Lapses in Funding.")
Acceptance of voluntary service except as provided by the Peace Corps Act or by the Civil Service Reform Act of 1978 (5 U.S.C. §3111), or employment of personal service in excess of that authorized by law, except in cases involving the safety of human life or the protection of property.

The creation of obligations in excess of operating budget advices or country budgets which do not exceed an allotment, apportionment or appropriation does not, in itself, constitute a statutory violation. It does constitute a violation of our internal administrative controls and, as such, may subject the responsible individual to appropriate administrative discipline.

11.0 Report of Violations

11.1 Responsibility of Chief Financial Officer

The Chief Financial Officer shall carefully monitor Agency financial operations to detect any apparent violation of the Anti-deficiency Act and Peace Corps internal administrative controls. In the case of an apparent violation, the Chief Financial Officer shall verify the facts, obtain a legal opinion from the General Counsel as to whether a violation has occurred, and submit a report to the Peace Corps Director. The report will contain at a minimum:

The title and symbol (including the fiscal year) of the appropriation or fund account, the amount involved for each violation, and the date on which the violation occurred;
The name and position of the employee(s) responsible for the violation;
All the pertinent facts of the violation, including the type of violation (e.g., over-obligation of allotment, over-obligation of apportionment, or over-expenditure of an appropriation), the primary reason or cause, and any statement of the responsible officer(s) or employee(s) with respect to any circumstances believed to be extenuating;
A statement of the administrative discipline imposed and any further steps taken with respect to the officer(s) or employee(s), or an explanation as to why no disciplinary action is considered necessary;
A statement of any additional action taken by, or at the direction of, the head of the Agency, including any new safeguards provided to prevent recurrence of the same type of violation;
A statement regarding the adequacy of the system of administrative control prescribed by the head of the Agency and approved by Office of Management and Budget (OMB). (If changes in the regulations are needed, proposals will be submitted as provided in OMB Circular A- 34.); and
If another Agency is concerned, a statement concerning the steps taken to coordinate the report with the other Agency.

Any employee who has knowledge of a violation shall be responsible for informing the Chief Financial Officer, so that he or she may initiate the action provided for herein.

11.2 Responsibility of Peace Corps Director

In the case of a statutory violation, the Director of the Peace Corps shall immediately report to the President, through the Director of OMB, and to the Congress. The report to the President will be in the form of a letter (original and three copies) to the President. The opening sentences of the letter will identify it as "... a report on an Anti-deficiency Act violation". The letter must include all data as outlined in Paragraph 11.1 above.

The report to the Congress will be in the form of identical reports to the presiding officer of each House. One copy of the report to the Congress will be submitted to OMB with the report to the President, unless the reports to the Congress and the President are identical.

The Anti-deficiency Act provides that any officer or employee responsible for violation of the Act or of this regulation may be subject to administrative discipline including suspension or removal and may also be subject to fine and imprisonment for knowing and willful violations. Officers or employees responsible for violation of non-statutory Agency administrative requirements may be subject to administrative discipline including suspension.

12.0 Deferrals and Rescission Proposals

Available budgetary resources may be withheld from obligation temporarily through the apportionment process with the intent of apportioning them for later use, before they lapse. This action is a deferral.

All funds deferred through the apportionment process, as well as apportioned funds provided for a specific purpose or project that are being obligated at a pace slower than intended by Congress, must be reported to Congress by the President in special messages. Deferral may be overturned at any time by passage of legislation disapproving the deferral. All deferred amounts must be released in time to be used prudently before they lapse. If a determination is made that such amounts should not be used or that the funds are not required to carry out the full objectives or scope of programs for which they are provided, a rescission will be proposed by the President prior to the beginning of the fourth fiscal quarter. Budget authority may also be proposed for rescission for fiscal policy or other reasons.

Amounts proposed for rescission will be withheld during the time the proposals are being considered by Congress. This may be accomplished through OMB apportionment action or through Agency withholding action.

All funds proposed for rescission, including those withheld, must be reported to Congress in special messages. Affirmative action in the form of an enacted law must be completed to rescind funds. If both Houses have not completed action on a rescission proposal by the end of 45 days of continuous session, the funds being withheld must be made available for obligation.

In situations where funds must be released because of Congressional inaction on proposed rescission, reapportionment requests reflecting the release of the affected funds must be submitted to OMB before the end of the prescribed 45 day period. Likewise, when legislation is enacted to disapprove a deferral, a reapportionment form reflecting release of the amounts previously deferred will be submitted to Office of Management and Budget (OMB) by the Chief Financial Officer not later than the first business day following passage of the resolution.

13.0 Other Funds

Peace Corps has available to it two trust fund accounts: "Gifts and Contributions," and "Advances from Foreign Governments." These funds are controlled through allotments and administrative budget advices issued by the Chief Financial Officer. Further information on these accounts may be found in Manual Section 720, "Peace Corps Partnership Program," Manual Section 721, "Gifts and Contributions to the Peace Corps," and Manual Section 722, "Host Country Contributions."

14.0 Monitoring Operating Budgets

The Peace Corps' Office of Planning, Budget and Finance carefully monitors the automated accounting reports and the monthly obligations of administrative budget holders. Also, Regional Directors and State Department Regional Administrative Management Centers and Financial Management Centers monitor manual and automated reports for Peace Corps countries to detect any apparent obligations in excess of approved country budgets, and promptly notify the Peace Corps Chief Financial Officer in the event an over-obligation is detected.

In the case of an over-obligation at the office or country level, the Planning and Budget Director will verify the facts and determine the impact on the Agency's administrative control of funds and what, if any, corrective action needs to be taken. This information will be included in a report submitted by the Planning and Budget Director to the Chief Financial Officer. The Chief Financial Officer may recommend appropriate administrative discipline up to and including suspension or removal for individuals responsible for serious or repeated over-obligation of administrative budgets.

15.0 References

MS 705 MS 720 MS 721 MS 722 MS 726 MS 727 "Financial Recordkeeping (Cuff Records) and Budget Tracking" "Peace Corps Partnership Program" "Gifts and Contributions to Peace Corps" "Host Country Contributions" "Trust Funds and Foreign Currency Accounts" "Use of Foreign Currencies"

16.0 Effective date

This Manual Section takes effect on the date of issuance.