File Code: - US Forest Service



|File Code: |6500/6300/15806500/6300/1580 |Date: |April 20, 2004 |

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|Subject: |CFO Bulletin No. 2004-007 - Using Budget Object Codes For Purchases of Property, Goods and Services C F O Bulletin No. |

| |2004-007 - Using Budget Object Codes For Purchases of Property, Goods and Services |

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|To: |Regional Foresters, Station Directors, Area Director, IITF Director, Deputy Chiefs, WO Staff Directors R e gional |

| |Foresters, Station Directors, Area Director, IITF Director, Deputy Chiefs, WO Staff Directors |

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PURPOSE

The purpose of this bulletin is to differentiate between Budget Object Codes used in the acquisition of capitalized real and personal property items, and those used for acquisition of goods and services that are expensed. Also included in this bulletin is a listing of job titles and their responsibilities in ensuring the quality and integrity of financial data, much of which is dependant on the use of correct Budget Object Codes. Enclosure 1 is a copy of the BOC’s available for use.

DEFINITIONS

Budget Object Code (BOC): A key element of accounting information used by the Federal Government to record its financial transactions according to the nature of goods or services provided or received. Both procurement and accounting operations personnel use BOCs on all transactions flowing through both the procurement and the accounting systems.

BOCs consist of 4-digits:

A. Positions 1 and 2 of the budget object code are called the Major Object Class Code. 31 is the Major Object Class 31 is used to identify the acquisition of Personal Property and Equipment. 32 Major Object Class 32 identifies the acquisition of Real Property lands and structures.

B. Positions 3 and 4 are called the Detail Sub-object Class Code. These two digits identify what type of property has been acquired. For example, Sub-object Class 12, combined with Major Object Class 31 (3112) identifies Furniture and Fixtures which that are capitalized. Sub-object Class 20, combined with Major Object Class 32 (3220) identifies Buildings and Attached Fixtures, which that are capitalized.

Capitalized Property: Capitalized property, either Personal or Real, must meet all three of the following criteria:

1) It must be of durable nature,

2) It must have a useful life of two or more years once it is placed into service,

3) Its initial acquisition cost must be $25,000 or more, except for internal use software, which it must be $100,000 or more. for internal use software. These amounts represent capitalization thresholds. Any Personal Property assets for costing less than these amounts, except for Accountable Personal Property defined below, are recorded to budget object codes other than 31 and 32 and are treated as operating expense in the current year rather than assets on the balance sheet for the agency. DO NOT ASSIGN A BOC OF 31 TO ANY ACQUISITION OF PERSONAL PROPERT IF THE COST IS BELOW $25,000.

4) An exception to this rule is 3140, which is used to record non-capitalized, non-accountable, non-sensitive property.

5) BOC 32 series is only used for land and interest on land, buildings and other structures, additions to buildings, non-structural improvements and fixed equipment that meet the capitalization criteria, except BOC 3290 which must be used to record land and structures having an initial acquisition cost of less than $25,000.

Capitalization of an asset places it in a property control and ledger system so that its costs can be tracked and subsequently depreciated in conformance with generally accepted accounting principles. Capitalized assets are presented on the agency balance sheet. Operating expenses are presented on the statement of net cost.

Accountable Personal Property: All capital leases (this would exclude operating leases for personal property), and all owned personal property having an acquisition cost of $5,000 or more (see AGPMR, paragraph 104-50.001-18 for definition of leases). Accountable Personal Property is all owned personal property having an acquisition cost of $5,000 or more and all leased personal property regardless of acquisition cost. BOCs in the 3150 and 3190 series are used to identify Accountable Personal Property. Accountable personal property also includes any item valued at less than $5,000, but determined to be Sensitive by the Agency Property Management Officer. Sensitive Personal Property items will be charged to BOC 3141. The current categories of Sensitive Forest Service property are:

1) All weapons (including, but not limited to, those used for law enforcement, cone collection, avalanche control, flame launcher, and bear protection);

2) All radiological equipment having a radioactive source;

3) Precise Positioning Service (PPS) Global Positioning System (GPS) receivers capable of receiving P(Y) code broadcast from the Department of Defense satellite constellation.

Infra Central (CPAIS): The fiscal module of Infra that records and stores accounting data for all capitalized real property assets for the Forest Service. Infra Central will soon be incorporated into the USDA CPAIS real property asset management system.

PROP: The subsidiary system for maintaining capitalized, accountable, and sensitive non-WCF personal property.

EMIS: The subsidiary system for maintaining capitalized and accountable personal property that is in the Working Capital Fund system.

BACKGROUND

The Office of Management and Budget (OMB) establishes the major object class codes and titles to be used by all Federal agencies. The BOCs available for use by USDA agencies are published in the National Finance Center (NFC) Procedures publication entitled Budget Object Classification Codes (BOCC). This publication is available electronically at .

Specific budget objects in the 3100 and 3200 series indicate the acquisition of accountable, sensitive, or capitalized property. Obligations recorded against the BOCs for capitalized property result in capitalization of the costs, whether or not the acquisitions meet capitalization criteria. Transactions categorized in the budget object codes for accountable and capitalized property are automatically transmitted to PROP or INFRA as updates to the property records, even if the acquisition does not meet the criteria for accountable or capitalized property.

The Forest Service also uses an accounting element (the General Ledger Post Type) within certain job codes to indicate that costs should be capitalized. Because of this coding convention, obligations against these job codes will result in capitalization of the goods or services acquired regardless of the budget object code. Examples include the Working Capital Fund (WCF) job codes that begin with the digits 98 and 85 and real property job codes that begin with the letters Q and Y.

CFO Bulletin No. 2002-025 provided direction regarding the increase in the threshold for capitalization of personal property. The current issuance of this bulletin is necessary because items that do not meet the criteria for accountable or capitalized property continue to be recorded to BOCs 31XX and 32XX, which produces incorrect accounting. In addition, items that should not be managed as accountable property are incorrectly directed to the PROP subsystem when accountable or capitalized property BOCs are used erroneously.

RESPONSIBILITIES

The Associate Deputy Chief, Budget and Finance, Chief Financial Officer is responsible for the quality and integrity of the financial data in the Foundation Financial Information System (FFIS) and its subsidiary systems.

The WO Financial & Accounting Operations Staff Director is responsible for:

1. Performing the same actions as required for the R/S/As and units, for Region 13 (WO).

2. Providing advice to field units to facilitate full compliance with this direction.

The WO Financial Reports & Reconciliation Staff Director is responsible for displaying Forest Service property and operating expenses timely and accurately in the financial statements, reconciling the amounts periodically, and obtaining descriptive details for narrative footnotes.

The WO Financial Policy and Analysis Staff Director is responsible for:

1. Issuing accounting policy and procedure governing commitments, obligations, property, and operating expenses, including the quality assurance and monitoring required, assuring the correct timing and recording of the assets, liabilities, obligations, and operating expenses.

2. Maintaining and analyzing historical statistics and trends of budget object code usage errors during internal reviews and transaction sampling in order to assess the accuracy of the BOCs retrospectively. This will allow us to improve upon the current direction, thereby increasing the accuracy and reliability of the financial statement information.

3. Maintaining data in the accounting system to ensure compliance with policies and procedures.

The WO Financial Management Systems Staff Director is responsible for implementing and maintaining the appropriate posting models to allow for proper analysis and compilation of accounting data to generate the related accruals.

The WO Acquisition Management Staff Director is responsible for establishing and implementing procurement operating procedures service-wide that require property specialists to review and approve all procurements using a property budget object in the 3100 or 3200 series.

Regions, Stations, Area, FPL, IITF, Job Corps, and Forest Supervisors (R/S/As) are responsible for the quality and integrity of financial data processed in their areas of responsibility, including the selection of the appropriate budget object codes for all procurements.

The Local Acquisition Management Staff is responsible for confirming the selection of the appropriate budget object codes for all procurements. It is the responsibility of the individual who enters a transaction into the accounting system, whether directly or through an interface, to apply the correct budget object that best describes the goods or services acquired.

The Local Budget and Finance Staff is responsible for:

1. Recording obligations into FFIS for undelivered orders in an accurate, timely manner; also responsible for the subsequent steps in the spending chain.

2. Ensuring that budget object codes shown on accounting documents are correct. All transactions entered into the accounting system, whether directly or through an interface, shall have the correct budget object that best describes the goods or services acquired.

POLICY

The budget object code that best describes the goods or services acquired shall be applied to all acquisitions of goods or services. Use the Detail Sub-object Class Code listed in the NFC publication, Budget Object Classification Codes (BOCC) for proper application. The definitions of the Major Budget Object Class Codes and Summary Level Object Titles must be taken into consideration when selecting the appropriate budget object code. The titles of Detail Sub-object Class Codes are not always descriptive enough to be used alone. For example, BOC 2591 - (Construction Contracts) might be applied incorrectly unless the title and definition of the Summary Level Budget Object Code 2590 - (Distributed Overhead) is also taken into consideration. This is especially a problem in PCMS where the system’s list of BOCs does not show the relationship between Subject Class Codes and Summary Level Titles.

Property specialists or other employee responsible for property shall review and approve all procurements using budget object codes in the 3100 and 3200 series. Property specialists shall signify their approval by handwriting their initials and the date as close to the budget object code as can be legible. If the individual who needs to enter a transaction into the accounting system needs to use a 31xx BOC, the Property Management Officer or Technician shall indicate their approval of the use of the BOC on the procurement request, agency copy of the purchase order, advanced acquisition plan, or other procurement-related document that indicates the BOC to be used.

Use of BOC’s that end in double “00” (e.g., 3100) are prohibited. Sub-object class reporting is necessary for both management information and reporting.

For property BOCs in the 31XX or 32XX series, accounting adjustments shall be processed to correct any BOC error. For non-property BOCs, an An accounting adjustment shall not occur if an incorrect BOCbudget object code is used on a transaction and the correct BOCbudget object is within the same Summary Level Object Class Code.

EFFECTIVE DATE

The policy and procedure in this bulletin is effective immediately.

INQUIRIES

Any procurement questions concerning this bulletin should be directed to Laurie Lewandowski at 703-605-4573. For financial policy questions, contact Gail McCrary at 703-764-9117. For property questions, contact Melissa Jones at 703-605-4664.

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|/S/ CHRISTOPHER L. PYRON |

|CHRISTOPHER L. PYRONCHRISTOPHER L. PYRON |

|DEPUTY CHIEF FOR BUSINESS OPERATIONSDEPUTY CHIEF FOR BUSINESS OPERATIONS |

Enclosure

cc: Laurie Lewandowski, Melissa Jones, laveta charity c c : Laurie Lewandowski, Melissa Jones, laveta charity

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