Financial Management

Question 1

Financial Management

Answer 1

Mission is to provide policy, procedures, and staffing that facilitates the execution of the President’s Budget (PB) in accordance with Appropriation Law.

Question 2

Phases of Budget Process

Answer 2

1. Formulation
2. Exactment
3. Execution
4. Audit

Question 3

Formulation

Answer 3

Result of the Planning and Programming phase

POMS are usually developed in late summer or early autumn, approximately 24 to 27 months prior to the start of the target fiscal year. The following spring, each DoD Component completes its evaluation of programs and policies.

The POM cycle is the first and perhaps the most critical fiscal exercise in support of the PB.

Inputs to support the formal Budget Estimate Submission (BES), which is essentially a refinement to the POM, are received in summer. The DoD Components prepare the BES in August and September and usually submit the BES in autumn. Office of the Secretary of Defense (OSD) and joint OSD/Office of Management and Budget reviews follow as the PB takes its final form. The Formulation phase ends with the submission to Congress of the PB in the winter prior to the new FY. The financial analyst is responsible for coordination of all Program Office inputs to the BES.

Question 4

Enactment

Answer 4

In autumn, (prior to submission of the PB) the President submits to Congress current Services’ (Army, Navy, Air Force, etc.) estimates. These projections identify the level of Budget Authority (BA) needed to support existing and proposed programs. Congressional review of these estimates begins the Enactment phase.

This phase continues with the receipt and review of the PB and then the passage of authorization and appropriations bills. In rare circumstances, the authorization and appropriations bills are passed and signed before the start of the government FY. If not, CRA.

Question 5

Execution

Answer 5

The use of available Budget Authority (BA) during the FY constitutes the Execution phase.

This phase consists of the Commitment, Obligation, Expenditure (also called Disbursement) and reporting use of appropriated funds.

Question 6

Audit

Answer 6

All units are responsible for assuring that the Obligations incurred and the resulting Expenditures and outlays are in accordance with applicable laws and regulations. Efforts directed at assuring compliance constitute the Audit phase

Question 7

Approved Budget Authority

Answer 7

After the President signs the appropriation and authorization bills, appropriated funds are distributed to the services and eventually trickle down through the applicable sub-divisions within each DoD component and finally to the program or unit level for execution. Appropriated funds are officially issued and authorized on BA or Operating Budget Authority Documents (OBAD). CANNOT exceed.

Question 8

Accounting Cycle

Answer 8

Three Phases:

1. Commitment (based on certified purchase requests, procurement directions, or orders)
2. Obligation
3. Expenditure/Disbursement (payment is made by DFAS). Sometimes referred to as outlays

Question 9

Program Element Monitor (PEM)

Answer 9

Action officer responsible for monitoring and communicating financial, schedule and programmatic facets of a program

Question 10

Program Element (PE)

Answer 10

Basic building block of the Future Years Defense Program. The PE is an 8-10 part alpha numeric program identifier

Question 11

Commands (MAJCOM, MACOM, SYSCOM)

Answer 11

A major subdivision within Services having a specific portion of the service (Air Force, Army, Navy, etc.) mission

User or Customer group that advocates for Programs; responsible for requirements and resources

Question 12

Defense Planning Guide (DPG)

Answer 12

Document, issued by Secretary of Defense, provides a strategic framework for developing the Service and DoD Agency program requests.

Question 13

Future Years Defense Program (FYDP)

Answer 13

Database is maintained by OSD

Contains detailed compilation of Total Resources (funding, manpower and forces) for all Defense Programs

Updated two times per annual PPBE cycle:

The FYDP Includes the Budget Year + 4 Out-Years for Total Resources + 3 additional years force structure

Question 14

Disconnect (D)

Answer 14

Funding shortfall (a “Bill”) in approved program due to mismatch between program resources and approved program content

Question 15

Initiative (I)

Answer 15

Proposal for additional funds (also a “Bill”) which adds to an on-going program or is a new start
Example: Develop a new satellite system

Question 16

Offset (O)

Answer 16

Resource (a “Billpayer”) identified to help pay for disconnects and initiatives–not “tied” to any particular disconnect or initiative
Example: Delay SBIRS to fund another requirement

Question 17

Congressional Enactment Cycle

Answer 17

Budget Resolution

DoD Authorization Process

DoD Appropriations Process

Continuing Resolution Authority (CRA)

Authorization and Appropriations Bills are enacted annually

Question 18

Congressional Enactment Cycle (Budget Resolution)

Answer 18

Initial activity after Congress receives President’s Budget

House/Senate Budget Committees

• Consider national priorities of total federal budget
• Set budget targets for federal budget & each appropriations bill, including Defense
• Individual programs not considered–will be “marked” by the Authorization and Appropriations Committees
• Approve non-binding budget resolution

Question 19

Congressional Enactment Cycle (DoD Authorization Process )

Answer 19

House and Senate Armed Services Committees (HASC and SASC)
-Provides statutory authority to establish or maintain programs
-Provide Congressional direction
*Detailed direction found in the Congressional language attached to the Authorization Bill
-Defines the scope and content for all programs
Sets funding limits for all programs

Question 20

Congressional Enactment Cycle (DoD Appropriations Process)

Answer 20

House and Senate Appropriations Committees (HAC/SAC)

• Appropriates funding annually for all 13 government agencies
• Appropriations can’t exceed Authorizations for individual programs
• Appropriations Act provides Budget Authority (“Credit Limit”) for the next fiscal year
• Permits federal programs to obligate the government to make payments from Treasury
• Provides Congressional direction
• Detailed direction found in Congressional language attached to Appropriations Bill

Question 21

Congressional Enactment Cycle (Continuing Resolution Authority (CRA))

Answer 21

Sustains government operations beyond the end of the fiscal year (30 Sep) until an Appropriations Bill can be passed by Congress

• Designed to continue ongoing activities at their current levels for short periods of time
• Spending is usually limited to the lowest level approved by the HAC or SAC
• Cannot start any new programs
• Cannot increase quantities

Question 22

Five major appropriation Categories

Answer 22

Research, Development, Test, and Evaluation (RDT&E)

Procurement

Operation and Maintenance (O&M)

Military Personnel (MILPERS)

Military Construction (MILCON)

Question 23

Propriety of Funds

Answer 23

Purpose

Rule: Funds appropriated by Congress must be used only for those purposes authorized in the specific appropriation (Title 31 U.S.C., Section 1301a)

Question 24

Bona Fide Need

Answer 24

Time

Rule: Obligation must be for genuine needs of the period for which the cited appropriation is available (Title 31 U.S.C. Section 1502a)

Question 25

Anti-Deficiency Act

Answer 25

Amount

Rule: Distribution, obligation, and expenditure of funds will not exceed budget authority or statutory/regulatory limitations (Title 31 U.S.C. Section 1341a)

Question 26

The Accounting Cycle

Answer 26

COMMITMENT
  ADMINISTRATIVE RESERVATION 
    OF FUNDS
     -- Purchase Request (PR) to fund year 1 of new 
        MILSTAR Contract

OBLIGATION
OFFICIAL RESERVATION OF FUNDS
– Contracting officer signs MILSTAR contract,
“obligates” the Government to pay ABC
contractor for services rendered

EXPENDITURE/DISBURSEMENT
LIQUIDATION OF AN OBLIGATION
– Paying an ABC invoice for services rendered on a
contract