Understanding Processing Against Closed Budgets, Unexpired Budgets, and Expired Budgets With Upward or Downward Adjustments

The United States federal government requires varying accounting treatment for source transactions based on whether the associated budget, or appropriation, is current, unexpired, expired or closed. During the unexpired funding period, budget authority is available for incurring "new" purchase orders. New contracts can be entered into during this phase and disbursements (vouchers) to liquidate purchase orders can be made. This phase lasts for a set number of years and does require upward or downward adjustments. The budget is said to be expired after the current period, or period of availability, has passed. The expired budget remains open to recording, adjusting, and liquidating properly chargeable amounts until the expiration period has ended and the budget is closed (cancelled) based on the end date that you specify. All transaction activity subsequent to the expiration date should be driven by existing obligations recorded during the budget's period of availability. With some exception, no new commitments or obligations are allowed after the budget has expired.

When you choose to use budget expiration functionality, the system does not allow you to process activity against closed budgets, or budgets that exceed their end dates specified on the Prior Year Adjustment ChartField page. After the budget is closed (cancelled), the United States federal government allows payments to be processed against your current year budget if the payment does not exceed 1 percent of the new budget.

See Processing Transactions Against Budgets with Different Funding States.

This section also deals with setting up for processing and automatic generation of budget entries to USSGL accounts that reflect upward or downward adjustments to obligations that are properly chargeable against expired or unexpired budget authority.

You do processing for expired funding for those transactions that were initially incurred while the related budget was current. Commitment Control provides an error message, which can be overridden, that informs you when you are attempting to process a transaction against expired funding, and the transaction reduces remaining spending authority. The system also determines if you are attempting to process a new obligation to an expired budget. Only approvers that you authorize have the ability to override the resulting error message and process transactions that are in addition to the original obligations incurred or to post the transaction to a new current year.

You receive an error message for expired funding if you are processing an upward adjustment—for example, the voucher is greater than the purchase order. This is because you are spending more than originally designated by the purchase order and this requires approval, or override.

You do not receive an error message if, for example, the vouchers are for the same amount (no adjustment) or less than (downward adjustment) the original purchase order. Downward adjustments denote that the funds set aside previously by a purchase order are not to be utilized and no error message is necessary.

Use Commitment Control budget override functionality to authorize a user to do an override of an upward adjustment error message and to continue processing. You will not receive an error for unexpired funding from the budget processor. Unexpired funding is still considered current but has other considerations for additional accounting.

Note:

Upward and downward functionality is predicated on liquidation by amount only. If you choose to liquidate by quantity, the accounting results for downward adjustment transactions as specified by the U.S. Treasury are not created.

See Budget Definition - Prior Year Adjustment ChartField Page.