CDFM Module 3 cheat sheet

PPBE phases run in sequence: Planning (strategy and fiscal guidance), Programming (program objective memorandum builds a six-year program), Budgeting (budget estimate submission), and Execution (obligation and outlay of appropriated funds).

Color of money rule: Procurement (appropriation 3010) buys end items and production; RDT&E (3600) funds research, development, test, and evaluation; O&M (3400) funds day-to-day operations, consumables, and services; MILPERS funds military pay and allowances.

Period of availability: O&M and MILPERS are annual funds (one-year); procurement is typically three-year; RDT&E is two-year; MILCON is five-year. Funds must be obligated within the period or expire.

Bona fide need rule: an obligation must serve a need arising in the period of availability; stockpiling or funding future-year requirements with current-year funds violates the rule unless a specific exception applies.

Anti-Deficiency Act prohibits obligating or expending in excess of an appropriation, obligating before funds are available, and accepting voluntary services; violations require reporting to Congress and the President.

Full funding policy: procurement appropriations must fund the total cost of an end item in the year of procurement rather than incrementally across years; exceptions include advance procurement and multiyear contracts.

Obligation is a definite commitment creating a legal liability; outlay is the actual cash disbursement. Unobligated balances remain available; expired funds may be used only for upward adjustments of existing obligations.

Manpower and workload drivers: civilian Full-Time Equivalents (FTE) convert work-hours to positions (1 FTE = 2,080 hours); reimbursable work is funded by customer orders rather than direct appropriation.

Cost estimating methods: analogy (comparing to similar past systems), parametric (statistical relationships such as cost-estimating relationships, CERs), engineering/bottom-up (detailed build-up), and actuals (historical cost data).

Learning curve: Y = aX^b, where Y is unit cost, a is first-unit cost, X is cumulative unit number, and b = log(learning rate)/log 2. An 80% curve means each doubling of cumulative quantity reduces unit cost to 80% of prior.

Inflation: then-year dollars include inflation; constant-year (base-year) dollars exclude it. Convert using the ratio of index values or a compound growth factor (1+i)^n.

Cost categories: direct vs indirect; recurring vs nonrecurring; variable vs fixed; sunk costs are excluded from decision analysis; opportunity cost is the value of the best forgone alternative.

Life-cycle cost includes research and development, procurement, operations and support, and disposal; operations and support often dominates total ownership cost.

Break-even analysis: break-even quantity = fixed costs / (unit price - unit variable cost); contribution margin per unit is price minus variable cost.

Net present value discounts future cash flows at the discount rate; a positive NPV indicates the alternative is economically favorable; use present value to compare alternatives with different timing.

Budget exhibits and justification: budget justification books show prior-year actuals, current-year estimates, and budget-year requests; price and program changes are separated to explain year-over-year deltas.

Accounting equation: Assets = Liabilities + Net Position (equity). Debits increase assets and expenses; credits increase liabilities, revenue, and net position.

Fund types: general fund, working capital/revolving funds, trust funds, and special funds. Revolving funds bill customers and use reimbursements to cover costs without annual appropriation.

Fund balance with Treasury (FBWT) represents the entity's claim on Treasury cash; it is reconciled with Treasury through the Statement of Transactions (SF 224) and suspense accounts.

Financial statements: balance sheet (financial position), statement of net cost, statement of changes in net position, statement of budgetary resources, and statement of custodial activity.

Budgetary accounting tracks obligations and outlays; proprietary accounting records assets, liabilities, revenues, and expenses. Both use the USSGL chart of accounts for standardization.

Cost accounting: full cost includes direct and indirect costs allocated to a cost objective; reimbursable and nonreimbursable costs must be distinguished.

Internal controls follow the GAO Green Book (Standards for Internal Control): control environment, risk assessment, control activities, information and communication, and monitoring.

Audit readiness: the CFO Act requires audited financial statements; material weaknesses and significant deficiencies are reported, and the audit opinion may be unmodified, qualified, adverse, or a disclaimer.