CDFM-A Module 4 cheat sheet

Budget authority types: annual (one-year), multi-year, and no-year appropriations; only no-year funds remain available until expended without fiscal-year limitation.

Appropriation life cycle: 5-year period of availability for obligation for annual funds (current year plus 5), then 5-year expired phase for upward adjustments only, then cancelled/closed.

Obligation occurs when a binding agreement (contract, order, grant) is executed; outlay is the actual cash disbursement, which lags obligation.

Apportionment (OMB SF 132) distributes appropriated funds by quarter or activity; agencies may not obligate faster than apportioned without OMB reapportionment.

Allotment is the agency-level subdivision of apportionment to operating units; sub-allotment further delegates spending authority within the agency.

Budget formulation timeline: agency submissions to OMB in fall, President's Budget to Congress first Monday in February, congressional action through September 30.

Continuing resolution funds activities at prior-year rate or the lower of House/Senate mark, generally without new starts, until full-year appropriation passes.

Anti-Deficiency Act (31 U.S.C. 1341) prohibits obligating before appropriation or exceeding apportionment; violations require report to President and Congress.

Program/mandatory spending is controlled by authorizing law (e.g., Social Security, Medicare); discretionary spending requires annual appropriations acts.

Purpose statute (31 U.S.C. 1301(a)): appropriations may be used only for the objects and purposes specified by Congress; necessary expense doctrine applies.

Bona fide needs rule (31 U.S.C. 1502): funds must be obligated for a legitimate need arising in the period of availability; no advance funding of future-year requirements.

Severable services contracts may cross fiscal years only if the obligation is for the portion of services rendered in the current period; nonseverable services may be funded entirely in the year the need arises.

MILSTRIP/MILSTRAP document numbering and the commitment-to-outlay chain: commitment, obligation, expenditure, outlay; each stage requires documented support.

ADA violation reporting: agency head must report to the President and Congress with all relevant facts; administrative discipline required; criminal penalties possible for willful violations.

Funds control techniques: administrative reservations, fund holds, obligation plans, and automated system edits that block obligations exceeding available authority.

Expired-phase rules: upward adjustments (e.g., contract price increases, termination costs) permitted; new obligations prohibited except for specific statutory exceptions.

M accounts (31 U.S.C. 1551) hold expired funds; after 5 years, unobligated balances are cancelled and returned to Treasury; obligated balances retained for outlay.

Federal accounting standards: SFFAS issued by FASAB; hierarchy includes SFFAS, Technical Bulletins, Technical Releases, and FASAB interpretations.

USSGL provides standard account definitions for proprietary (asset/liability/equity) and budgetary accounts; budgetary accounts track authority, apportionment, and obligations.

Proprietary vs. budgetary accounting: proprietary records financial position and results; budgetary records the status of budgetary resources; both must reconcile.

Required financial statements: Balance Sheet, Statement of Net Cost, Statement of Changes in Net Position, Statement of Budgetary Resources, and Statement of Custodial Activity (if applicable).

Statement of Net Cost reports gross cost less earned revenue by program; intragovernmental and public costs are displayed separately.

Agency financial reports include Management's Discussion and Analysis (MD&A), financial statements, notes, and required supplementary information (RSI).

Accrual basis: expenses recognized when incurred, not when paid; liabilities include accounts payable, accrued payroll, and environmental/cleanup liabilities (SFFAS 5/6).

Reconciliation between net cost and net outlays is required in the Statement of Budgetary Resources or its notes, explaining accrual-to-cash differences.

Contract types: firm-fixed-price (FFP) shifts cost risk to contractor; cost-reimbursement shifts risk to government; T&M and labor-hour are hybrid with ceiling limits.

Funding documents: DD Form 448 (MIPR), purchase requests, and fund cites must be validated before obligation; unauthorized commitments (ratifications) require approval per FAR 1.602-3.

Progress payments are made on costs incurred (typically 80% for large business, 90% for small business); performance-based payments are tied to defined events/milestones per FAR 32.

Advance payments require statutory authority and are generally limited; interest is charged to the contractor unless waived by statute.

Contract financing vs. contract performance: financing payments do not constitute acceptance or affect title transfer provisions.

Limitation of cost/funds clauses (FAR 52.232-20/22): contractor must notify government before incurring costs beyond funded amount; government not obligated beyond funds allotted.

Cost accounting standards (CAS) apply to certain negotiated contracts; noncompliance can trigger cost adjustments and disclosure requirements.

Contract modifications: bilateral (supplemental agreement) vs. unilateral (change order); equitable adjustment applies to changes within the general scope of the contract.

GAO Green Book (Standards for Internal Control in the Federal Government) components: control environment, risk assessment, control activities, information and communication, monitoring.

OMB Circular A-123 requires management to assess and report on internal control over financial reporting and to maintain an internal control program.

Five components of internal control under COSO/Green Book map to 17 principles; agencies document controls and test operating effectiveness.

Audit readiness artifacts: internal control narratives, risk assessments, test plans, sample support, corrective action plans, and audit liaison logs.

Material weakness vs. significant deficiency: material weakness is a deficiency (or combination) that results in a reasonable possibility of material misstatement not being prevented or detected timely.

Audit findings require corrective action plans with milestone dates, responsible owners, and validation testing before closure.

Segregation of duties: separate authorization, custody, recording, and reconciliation functions to prevent and detect errors or fraud.

Improper payment reporting under Payment Integrity Information Act (PIIA) requires agencies to estimate and report improper payment rates and take corrective action.

Cost estimating methods: analogy, parametric, engineering (bottom-up), and extrapolation from actuals; select based on data availability and required accuracy.

Cost Estimating Relationship (CER): statistical relationship between cost and one or more independent variables (e.g., cost per square foot, cost per flight hour).

Life-cycle cost (LCC): total cost of acquisition, operations and support (O&S), and disposal; O&S typically dominates long-lived systems.

Time value of money: PV = FV / (1 + r)^n; use OMB Circular A-94 discount rates for federal economic analyses.

Net present value (NPV) decision rule: accept alternatives with positive NPV; among mutually exclusive alternatives, choose highest NPV.

Break-even analysis: compare fixed and variable cost structures; break-even quantity = fixed cost difference / variable cost difference per unit.

Cost-benefit analysis vs. cost-effectiveness analysis: CBA monetizes outcomes; CEA compares alternatives achieving a defined non-monetized outcome at least cost.

Sensitivity analysis tests how conclusions change with key assumptions; identify critical variables and document ranges and sources.

Sequestration under the Balanced Budget and Emergency Deficit Control Act reduces discretionary spending across-the-board when statutory caps are exceeded.

Budget authority vs. outlays: BA is authority to incur obligations; outlays are cash payments; budget deficit is measured in outlays.

Reprogramming moves funds within an appropriation; must follow statutory and committee notification thresholds; below-threshold actions are internal.

Transfer of funds between appropriations requires explicit statutory authority; absent authority, transfers are prohibited.

OMB Circular A-11 governs budget formulation and execution, including apportionment and SF 132 requirements.

Authorizing vs. appropriating committees: authorization sets program and ceiling; appropriation provides funds; both actions generally required.

Obligation adjustments: upward adjustments increase an existing obligation; downward adjustments decrease it; both must be recorded in the proper period.

Administrative subdivision of funds: apportionment (OMB), allotment (agency head), sub-allotment (operating level), and allocation (within activity).

Funds control reviews test whether obligations were recorded timely, supported by documentation, and within available authority.

Antideficiency Act also prohibits accepting voluntary services (31 U.S.C. 1342) except for emergencies involving life or property.

Continuing resolution constraints: no new starts, no program increases, and no obligations beyond the CR rate unless excepted.

Impoundment: deferral (limited) and rescission (requires congressional approval); withholding funds without authority is a violation.

Fund balance with Treasury (FBWT) is the aggregate of budgetary resources; reconciliation with Treasury is a key internal control.

Custodial activity statements report collections where the agency is not the beneficiary; these are not the agency's revenue.

Note disclosures required for significant accounting policies, commitments and contingencies, and intragovernmental balances.

Intragovernmental eliminations prevent double counting in government-wide consolidated financial statements.

Audit opinion types: unmodified, qualified, adverse, disclaimer; an adverse or disclaimer opinion signals pervasive misstatement or scope limitation.

Federal Financial Management Improvement Act (FFMIA) requires agencies to comply with federal accounting standards, USSGL, and financial management systems requirements.

Contract financing payment vs. invoice payment: financing payments are made before acceptance; invoice payments are made after acceptance.

Prompt Payment Act requires payment within 30 days of receipt of a proper invoice; interest penalties accrue on late payments.

Cost-reimbursement contracts require accounting system adequacy and incurred cost submissions; provisional billing rates are trued up at closeout.

Contract closeout: verify physical completion, settle subcontractor claims, deobligate excess funds, and reconcile final costs.

Undefinitized contract actions (UCAs) require definitization within statutory limits; obligations before definitization are limited to a percentage of the not-to-exceed amount.

Termination for convenience vs. default: convenience entitles contractor to costs incurred plus profit on work done; default may assess excess reprocurement costs.

Risk assessment: identify, analyze, and respond to risks at entity and transaction levels; document likelihood and impact.

Control testing: design effectiveness first, then operating effectiveness using samples; document population, sample size, and results.

Corrective action plan statuses: open, in progress, validated/closed; closure requires evidence the control now operates effectively.

Audit readiness timeline: pre-audit planning, PBC (prepared by client) list, walkthroughs, interim testing, year-end testing, and management representation letter.

Internal control over financial reporting (ICOFR) testing focuses on significant accounts, disclosures, and related assertions (existence, completeness, valuation, rights, presentation).

Fraud risk factors: pressure, opportunity, rationalization; controls must address segregation of duties and management override.

Cost estimating: learning curve models reduce unit cost as cumulative quantity doubles (e.g., 80% learning curve means unit cost falls 20% per doubling).

Inflation: use then-year dollars for budget submissions and constant-year dollars for economic analysis; document escalation indices.

Cost drivers: identify the variable that most affects cost (quantity, complexity, hours); validate with regression or historical data.

Should-cost analysis: independent estimate of what a reasonable buyer should pay, used in negotiations and affordability assessments.

Affordability analysis compares program cost against budget constraints; cost growth beyond thresholds triggers reporting under Nunn-McCurdy (major defense programs).

Risk and uncertainty: apply Monte Carlo or three-point estimates (optimistic, most likely, pessimistic) to produce a range, not a point estimate.

Passback: OMB's response to agency budget submissions, typically communicated in fall, setting the agency's allowance for the President's Budget.

Budget execution vs. formulation: formulation plans future-year requests; execution manages current-year obligations and apportionments.

Congressional budget resolution sets 302(a) and 302(b) allocations that constrain appropriations subcommittees.

Scorekeeping: CBO and OMB score legislation for budget authority and outlays; mandatory spending scored against baseline.

Commitment vs. obligation: commitment is an administrative reservation before a binding agreement; obligation is the legal liability.

MILSTRIP requisition, MILSTRAP accounting: document numbers track requisitions, obligations, and disbursements for audit trails.

Funds control: available balance = authority - commitments - obligations; automated systems block obligations exceeding available balance.

Year-end close: validate open obligations, record accruals, and ensure no new obligations after September 30 without authority.

Unauthorized commitment ratification: requires legal review, funds availability, and approval by an official with authority per FAR 1.602-3.

Continuing resolution expiration: if no appropriation by the CR expiration, agencies must execute orderly shutdown excepted activities.

Journal entries must balance budgetary and proprietary; e.g., recording an obligation debits undelivered orders and credits unobligated balance.

Undelivered orders (UDO) represent obligated but unpaid amounts; delivered orders represent goods/services received but unpaid.

Accounts payable vs. accrued expenses: AP for invoiced amounts; accrued for incurred but unbilled amounts.

Financial statement assertions: existence/occurrence, completeness, rights and obligations, valuation/allocation, presentation and disclosure.

Management's Discussion and Analysis (MD&A) provides context and is unaudited but reviewed for consistency with the statements.

Improper payment estimation uses sampling and statistical methods; rates are reported in the agency's AFR and PaymentAccuracy.gov.

Funding of contract modifications: within scope uses original appropriation if need existed; out of scope requires new bona fide need determination.

Incremental funding: cost-reimbursement and some fixed-price contracts may be incrementally funded; Limitation of Funds clause applies.

Contract financing rates: progress payments based on costs incurred (80/90%); performance-based payments negotiated as events, not to exceed 90% of price.

Contract audit support: DCAA audits incurred costs, accounting systems, and proposals; audit reports inform negotiation and closeout.

Contract type selection: use FFP when requirements are well defined; use cost-reimbursement when uncertainty is high and cost controls exist.

Contractor past performance and responsibility determinations are documented in the contract file; not the same as bid responsiveness.

Green Book principles include tone at the top, ethical values, and oversight by an audit committee or equivalent.

Control environment includes integrity, commitment to competence, management philosophy, organizational structure, and HR policies.

Information and communication: controls must produce reliable, timely information and communicate responsibilities and results.

Monitoring: ongoing evaluations and separate evaluations (internal audit, external audit, management reviews) with corrective action.

Audit finding elements: condition, criteria, cause, effect, and recommendation; corrective action addresses cause, not just symptom.

Evidence standards: sufficient, appropriate, and relevant; document source, date, and preparer for each sample tested.

Cost-benefit analysis: compare incremental benefits to incremental costs; use present value and discount at OMB A-94 rates.

Cost-effectiveness analysis: rank alternatives by cost per unit of outcome; use when benefits cannot be monetized.

Sensitivity analysis: vary key assumptions (quantity, rates, schedule) to identify which drive the decision; document ranges.

Break-even analysis: break-even quantity = fixed cost difference / variable cost difference; useful for make-or-buy decisions.

Life-cycle cost: include acquisition, O&S, and disposal; O&S often 60-80% of total for long-lived systems.

Should-cost analysis: independent estimate of a reasonable price; used to negotiate and assess affordability, distinct from a contractor proposal.