Part 6 Financial Mgt Overview

Question 1

The budget process has four main phases:

Answer 1

1) Formulation; (2) Enactment; (3) Execution and (4) Audit.

Question 2

Obligations are

Answer 2

documented transactions which constitute a legal requirement to furnish supplies or services and for the government to pay for any items at completion or delivery. An obligation is an order placed, a contract awarded, a service received or anything which establishes a legal requirement for future payment of money

Question 3

Expenditures/disbursements

Answer 3

occur when an invoice for goods and services or similar document is received and payment is made by DFAS. (Defense Finance Accounting Service)

Expenditures/disbursements are also sometimes referred to as outlays.

Question 4

There are three main principles that the financial analyst must adhere to when executing funds:

Answer 4

Bona Fide Need, the Proprietary of Funding and the Antideficiency Act.

Question 5

Bona Fide Need

Answer 5

The bona fide need rule is one of the most basic principles of appropriation law. The rule states that a FY appropriation may be obligated only to meet a legitimate (“bona fide”) need of the FY for which the appropriation was authorized.

Question 6

Propriety of Funding

Answer 6

The financial analyst ensures that funds are used according to appropriation law. Funds appropriated by Congress must be used only for those purposes authorized for the appropriation. To determine the correct appropriation to charge, evaluate the nature of the work to be performed, or the services or goods to be acquired, against the purpose of appropriations.

Question 7

ANTIDEFICIENCY ACT

Answer 7

intent of the ADA is to prevent distribution, obligation, and expenditure/disbursement of funds over and above amounts approved by Congress for specific purposes. Financial analysts track the approved Budget Authority and the amount of funds committed, obligated and expended/disbursed to ensure no such violations occur.

Question 8

The raw inflation rate is

Answer 8

a percentage (e.g. 2%, 3.5%, etc.) showing the change in prices from the mid-point of one year to the mid-point of the next year. If an economist reports that there has been a 3% increase in prices due to inflation over the last Fiscal Year, he would be referring to a raw inflation rate of 3%.

Question 9

The raw inflation indices

Answer 9

The raw inflation indices provide a means of compounding inflation rates from a Base Year which is assigned a raw inflation index of 1.00. The raw inflation indices are used to convert from Constant/Base year dollars of one year to Constant/Base year dollars of another year. The raw inflation indices also allow meaningful cost comparisons between dollars from different Constant or Base years.