Funds Management and Accounting
Funds Management and Accounting tests the life cycle of appropriated funds, the dual accounting model that records them, and the rules for reimbursements and payments.
Period of availability and account life
- Annual appropriations (O&M, MILPERS) are available for one fiscal year.
- Multi-year appropriations: procurement typically three years, RDT&E two years.
- No-year appropriations remain available until the purpose is carried out; working capital and revolving funds operate this way.
- Expired accounts still accept upward adjustments to recorded obligations (31 U.S.C. 1553) but cannot fund new obligations.
- After five years an expired account is cancelled (31 U.S.C. 1552); unobligated balances return to Treasury, and paying a legitimate later adjustment requires a current appropriation with the same purpose under 31 U.S.C. 1557.
Budgetary and proprietary accounting
Every transaction posts in both views. Budgetary accounts track authority, commitments, obligations, and outlays and feed the SF 133. Proprietary accounts use accrual accounting and feed the Statement of Net Cost and Balance Sheet. Both depend on USSGL accounts recorded at the transaction level, and Fund Balance with Treasury is reconciled monthly against Treasury records.
Reimbursements
The Economy Act (31 U.S.C. 1535) permits orders between federal entities only when the service is available, the ordering activity has a bona fide need, and funds are obligated when the order is placed. MIPRs document intra-DoD orders; the performing activity must accept an order before obligating against it. Working capital funds (10 U.S.C. 2208) bill customers at stabilized rates intended to recover full costs.
Payments
Under the Prompt Payment Act (31 U.S.C. 3901-3907), payment is due 30 days after receipt of a proper invoice or acceptance, whichever is later, with constructive acceptance generally at seven days. Interest penalties are automatic, cannot be waived, and are paid from funds available when the penalty is due. Certifying officers are appointed on DD Form 577, are personally accountable, and may request relief under 5 U.S.C. 3528.
Worked example
A two-year RDT&E appropriation expired 30 September 2024. In March 2026 a vendor submits a legitimate $300,000 invoice above the recorded obligation. The account is expired but not cancelled; cancellation occurs five years later on 30 September 2029, so an upward adjustment is recorded against the expiring authority. The identical invoice in 2030 would require a current appropriation available for the same purpose.
Traps that cost marks
- Assuming no-year funds are never cancelled.
- Assuming a reimbursable order is free money; it consumes the customer's authority and must be accepted before performance begins.
- Assuming an expired account can fund a brand-new requirement because a balance remains.