U.S. DEPARTMENT OF AGRICULTURE
WASHINGTON, D.C. 20250
DEPARTMENTAL REGULATION
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Number: 2230-001 |
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SUBJECT: Reviews of Unliquidated Obligations |
DATE: August 22, 2006 |
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OPI: Office of Associate Chief Financial
Officer-Policy and Planning |
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1 PURPOSE
This regulation
prescribes policies and procedures for annual reviews and certification of
reviews of unliquidated obligations.
Agencies are required to certify to an annual review of unliquidated
obligation balances as of July 31, by August 31, each fiscal year.
Annual reviews of
unliquidated obligations are necessary to properly report obligation balances,
certify the validity of obligated balances, make funds available that otherwise
would not be used, reduce the risk of misuse and theft of funds, and improve
the Treasury Department’s ability to forecast outlay and borrowing needs.
2 CANCELLATIONS
This directive is a
revision of DR 2230-001 and cancels DR 2230-001, dated April 17, 2002.
3 POLICIES
a The Chief
Financial Officer, or equivalent, for each agency must coordinate annual
reviews of unliquidated obligations between program, contracting, and financial
personnel for the period ending July 31.
b Program and/or
contracting personnel will determine if unliquidated obligations may be
deobligated and provide a written notification to financial personnel.
c Financial
personnel will deobligate unliquidated obligations for goods or services for
which delivery or performance is not expected to occur, based on written
notification from program and/or contracting personnel.
d Obligations with
no activity for the most recent twelve (12) months will be deobligated unless
there is a documented bona-fide purpose for the obligation to remain and a
justification for the period of inactivity.
e The Chief
Financial Officer, or equivalent, will retain documentation of reviews and the
bona-fide purpose/justification for the period of inactivity for a period of
five years.
f The Chief
Financial Officer, or equivalent, for each agency must provide the Associate
Chief Financial Officer - Financial Operations (ACFO-FO) an annual
certification that annual reviews were performed and unliquidated obligations
existing as of July 31, are valid based on the reviews. The annual certification must be provided to
ACFO-FO by August 31.
g The ACFO–FO will monitor agency compliance
with this regulation.
4 DEFINITIONS
a Unliquidated
Obligations. The amount of a financial
obligation not yet expended.
b Deobligation. The cancellation or downward adjustment of a
previously recorded obligation.
5
PROCEDURES
a Identification. Financial personnel will identify
unliquidated obligations, inactive for at least twelve (12) months, from
reports generated from the accounting system by fiscal year. All unliquidated obligations inactive for
twelve months or more must be selected for review. A dollar majority of unliquidated obligations inactive for less
than twelve months may be selected for review based on a sample.
b Notification. Financial personnel will notify program and
contracting personnel of unliquidated obligations selected for review in
writing, and request a written notification of their validity. A standard form letter should be used for
this purpose.
c Determination. Program and contracting personnel will
review unliquidated obligations selected to determine whether delivery of goods
or services or performance is expected to occur:
(1) Program and contracting personnel must consider, if applicable:
(a) The period of fund
availability;
(b) The timeliness of
delivery or performance;
(c) The completeness and
accuracy of information provided by grant or loan recipients;
(d)
Whether funds have been expended consistent with the percentage of
completion;
(e) Whether remaining funds are sufficient to
complete the order
in accordance with the
specifications;
(f)
Justifications for amendments to funding levels;
(g)
Supplemental loans, grants, etc.;
(h) Reasons for
lack of activity, such as litigation or delay in contract closeout;
(i) Any provisions
of the agreement or contract that may permit or prohibit deobligation or
reprogramming; and
(j)
Any other relevant factors, when making a determination.
(2)
The review should disclose unliquidated obligations for projects:
(a)
That do not have a legal basis, or are not properly authorized and
supported by appropriate documentation;
(b) Which have been completed and have not been
closed out; and
(c) Under which no future expenditures are
expected.
Once
a determination is made that an unliquidated obligation can be deobligated,
program and/or contracting personnel will notify financial personnel in
writing.
d
Deobligation. Financial personnel will cancel or adjust unliquidated
obligations in the accounting system based on the written notification from
program and/or contracting personnel.
e Certification. The Chief Financial Officer, or equivalent,
Chief Financial Officer for each agency must submit a certification to the
ACFO–FO by August 31 each year, stating:
“I hereby certify that
annual reviews of unliquidated obligations were performed in accordance with
Departmental Regulation 2230-001, and that the unliquidated obligations
existing at fiscal year-end are valid based on the reviews.”
For
the purpose of giving qualified certifications, statistical sampling may be
used for obligations inactive for less than twelve months. Obligations without activity for the past
twelve months will be deobligated unless there is a bona-fide purpose for the
remaining obligation and justification for the period of inactivity. If valid statistical sample reviews of
obligations with activity during the past twelve months were performed and the
amounts certified to are subject to an error rate the certification should so
state.
f Retention. The CFO, or equivalent must retain reports,
records, and certifications of unliquidated obligations reviewed for a period
of five years for audit purposes.
6 INQUIRIES
Inquiries
should be directed to the Office of Associate Chief Financial Officer –
Financial Policy and Planning at (202) 720-8345 or ACFO-FO at (202) 720-1888.
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