Processing Payments Against Closed Budgets

To provide spending limits and to prevent improper payment against closed funding the United States federal government provides for payment of closed obligations against new current budgets to a limit of 1 percent of the new budget.

The Commitment Control budget processor recognizes a budget as closed when the end date is attained for that budget and rejects further payments.

To process payments associated with closed budgets you establish additional budgets as part of the new current year budgeting process for specific spending that is associated with closed-year obligations. For example, you are aware that a closed budget has unpaid obligations. As a part of the new budgeting for the current year you create an adjunct to the new current year budget, or a budget of 1 percent of the new budgeting total amount. Ninety-nine percent of the new budget is placed in its own budget and reserved for new obligations. The 1 percent budget is its own budget having its own budget keys. For example, it can be distinguished as Fund 100X within the overall current budget. Closed budget liquidations cannot exceed the 1 percent limit of current year funding.

These steps illustrate the use of 1 percent budgets and liquidations when you are using Prior Year Adjustment ChartField and dating functionality:

1. If you attempt to post a payment or liquidation against a closed budget (or closed funding), the system does not allow the transaction because the budget is closed and no funds are available to process the liquidation, or payment.

   To accommodate these payments you create a current year 1 percent budget after determining the necessary account, or budget and ChartField keys.

2. Creating the required budgets entails:

   1. Establishing a 1 percent budget covering obligations for budgets that are now closed and subject to the 1 percent rule of Public Law 101-510.

   2. Establishing a revised current year budget representing the normal current funds available for obligations and liquidations.

      This is typically established at a minimum value of 99 percent of the total funds available for the current year.

3. When processing liquidations subject to Public Law 101-510, record the expenditures against the 1 percent budget.

   Current budget processing validates that the user does not exceed the 1 percent budget. However, no new purchase orders or obligations should be allowed against the 1 percent budget. The account (budget) should only be used for liquidations against obligations established in the funding year where the budget is now closed.

   This example illustrates the process:

   • A single year appropriation ABC2006 expired on September 30, 2006.

     The funds were still available for processing liquidations against previously established purchase orders for a period of five years, ending on September 30, 2011. At that time, the appropriation was closed with an unliquidated balance of 100 USD that was cancelled.

   • In May 2012, you receive a 10 USD voucher against an existing purchase order associated with account ABC2006.

     You attempt to post the voucher against ABC2006 and receives a failure warning indicating that the budget is closed.

   • To post this voucher to current year account, the ChartField combination should be revised on the transaction to post against the current year 1 percent budget.

     This is accomplished by taking the current year Appropriation ABC2012 for a total of 5000 USD available and establishing two sub-budgets. One is the 1 percent of the current ABC2012 budget (50 USD) and the remainder of 4550 USD is recorded to a second budget.

   • You post any subsequent vouchers for the same purchase order against the 1 percent current year budget, which is subject to normal budget checks for funds availability within the 1 percent budget.