* February 2020 VOLUME 3, CHAPTER 8: “STANDARDS FOR ...

DoD 7000.14-R.

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Financial Management Regulation

Volume 3, Chapter 8 *August 2023

VOLUME 03, CHAPTER 08: "STANDARDS FOR RECORDING AND REVIEWING COMMITMENTS AND OBLIGATIONS"

SUMMARY OF MAJOR CHANGES

Changes are identified in this table and also denoted by blue font.

Substantive revisions are denoted by an asterisk (*) symbol preceding the section, paragraph, table, or figure that includes the revision.

Unless otherwise noted, chapters referenced are contained in this volume.

Hyperlinks are denoted by bold, italic, blue, and underlined font.

The previous version dated February 2020 is archived.

PARAGRAPH All

2.3.7 3.7 8.1.3 15.2.1 15.4 16.2.4 16.8.2.1

Policy Memo

EXPLANATION OF CHANGE/REVISION

Administrative updates to include clarifying language and sections reorganized in accordance with Department of Defense Financial Management Regulation (FMR) Revision Standard Operating Procedures. Emphasized recording of commitment of intragovernmental orders prior to entry in the Government Invoicing system. Clarifying language to distinguish fund holders due diligence responsibilities for inter- and intra-governmental orders. Clarifying language on use of Fiscal Service Form 7600B. Clarifying language on internal controls with supporting FMR volume and chapter references. Clarifying language on segregation of duties with supporting FMR volume and chapter reference. Clarifying language on sub-allotter and sub-allottee dormant balance roles. Clarifying language on the roles and activities of deobligation of dormant obligations. The Deputy Chief Financial Officer's policy memorandum, "Dormant Account Review - Quarterly Permanent Change of Station Dormancy Requirement Adjustment (FPM 21-09)," dated November 8, 2021 was incorporated into the chapter and canceled.

PURPOSE Revision

Revision Revision Revision Revision Revision Revision Revision

Cancellation

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Financial Management Regulation Table of Contents

Volume 3, Chapter 8 *August 2023

VOLUME 03, CHAPTER 08: "STANDARDS FOR RECORDING AND REVIEWING COMMITMENTS AND OBLIGATIONS" ................................................................................... 1

1.0 GENERAL ..................................................................................................................... 5

1.1 Purpose ........................................................................................................................... 5 1.2 Authoritative Guidance .................................................................................................. 5

2.0 COMMITMENTS.......................................................................................................... 5

2.1 Definition ....................................................................................................................... 5 2.2 Recording of Commitments ........................................................................................... 6 2.3 Special Provisions for Determining the Amounts of Commitments.............................. 6 2.4 Validating Commitments ............................................................................................... 8

3.0 OBLIGATIONS ............................................................................................................. 8

3.1 Definition ....................................................................................................................... 8 3.2 Obligation Responsibilities ............................................................................................ 9 3.3 Recording Obligations ................................................................................................... 9 3.4 Recording Contract Obligations................................................................................... 10 3.5 Recording Maintenance and Repair Projects Obligations............................................ 12 3.6 Determining Scope of Work Changes.......................................................................... 13 *3.7 Due Diligence............................................................................................................... 14

4.0 RECORDING JUDGMENT FUND OBLIGATIONS ................................................ 15

4.1 Legal Authority ............................................................................................................ 15 4.2 Reimbursement of Contract Dispute Act Judgments ................................................... 15 4.3 Reimbursement of No FEAR Act Judgments .............................................................. 17 4.4 Administrative Oversight Roles and Responsibilities for Judgment Fund .................. 17

5.0 RECORDING GOVERNMENT-WIDE COMMERCIAL PURCHASE CARD OBLIGATIONS ........................................................................................................................ 18

6.0 RECORDING OBLIGATIONS FOR PROCUREMENT CONTRACTS AND ORDERS ................................................................................................................................... 18

6.1 Firm Fixed Price Contract ............................................................................................ 18 6.2 Fixed Price Contract with an Escalation, Price Redetermination, or an Incentive Provision................................................................................................................................. 18 6.3 Cost Reimbursement and Time and Material Contracts ........................................ .... 19 6.4 Indefinite Delivery Type Contracts .............................................................................. 19 6.5 Contract Authorizing Variations in Quantities to be Delivered ................................... 19 6.6 Multi-year Procurement Contract................................................................................ 19 6.7 Letter Contract or a Letter of Intent ............................................................................. 20

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Financial Management Regulation Table of Contents (Continued)

Volume 3, Chapter 8 *August 2023

6.8 Interest on Contractor Claims ...................................................................................... 20 6.9 Interest Payable under the Prompt Payment Act.......................................................... 20 6.10 Purchase Orders............................................................................................................ 20 6.11 Amendment of a Contract ............................................................................................ 21 6.12 Termination of Contracts and Agreements .................................................................. 22 6.13 Foreign Currency Exchange Fluctuations .................................................................... 22

7.0 RENTAL AGREEMENTS AND LEASES OF REAL AND PERSONAL PROPERTY ...................................................................................................................................... 22

7.1 Amount Recorded as an Obligation on Rental and Lease Agreements ....................... 22 7.2 Rental Agreement Terminated by the U.S. Government ............................................. 22 7.3 Rental Agreement Terminated Without Costs, with Notification ................................ 22 7.4 Rental Agreements with Specified Dollar Payment..................................................... 23 7.5 Domestic or Foreign Rental Agreement Not Exceeding 12 Months............................ 23 7.6 Domestic Lease Agreements for Periods Greater Than One Year............................... 23 7.7 Obligations for GSA Standard Level User Charges..................................................... 23

8.0 INTRA-GOVERNMENTAL REQUISITIONS AND ORDERS PLACED WITH DOD COMPONENTS OR OTHER U.S. GOVERNMENT AGENCIES................................ 24

8.1 Reimbursable Procurement .......................................................................................... 24 8.2 Direct Citation Procurements ....................................................................................... 24 8.3 Reimbursable Orders with Other DoD Activities ........................................................ 25 8.4 Modifying Reimbursable Orders.................................................................................. 26

9.0 ORDERS PLACED WITH (OR THROUGH) DEFENSE WORKING CAPITAL FUND ACTIVITIES ................................................................................................................. 26

9.1 General ......................................................................................................................... 26 9.2 Recording DWCF Stock Funds.................................................................................... 26 9.3 Change Notices ............................................................................................................ 27 9.4 Economy Act and Project Orders Placed with DWCF Activities ................................ 28

10.0 PERSONAL SERVICES AND BENEFITS OBLIGATIONS .................................... 28

10.1 Obligations Recorded for Payments to Military and Civilian Employees ................... 28 10.2 Obligations Recorded for Subsistence In Kind ............................................................ 28 10.3 Obligations Recorded for Annual and Sick Leave of DoD Employees ....................... 28 10.4 Obligations Recorded for Severance Pay to U.S. Government Civilians and Foreign National Employees ............................................................................................................... 29 10.5 Obligations Recorded for Severance Pay Under Specified Conditions ....................... 29

11.0 PERMANENT CHANGE OF STATION OBLIGATIONS RECORDED ................. 30

12.0 TEMPORARY DUTY TRAVEL OBLIGATIONS RECORDED .............................. 30

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Financial Management Regulation Table of Contents (Continued)

Volume 3, Chapter 8 *August 2023

13.0 OTHER OBLIGATIONS............................................................................................. 30

13.1 Loan Agreements ......................................................................................................... 30 13.2 Grants and Subsidies Obligations Recorded ................................................................ 31 13.3 Bid Protests or Other Challenges ................................................................................. 31 13.4 Liquidated Damages Recorded .................................................................................... 32 13.5 Litigation Obligations Recorded .................................................................................. 32 13.6 Bills of Lading.............................................................................................................. 32 13.7 Public Utility Services Obligations Recorded.............................................................. 33 13.8 Claims .......................................................................................................................... 33 13.9 Legal Determinations ................................................................................................... 33 13.10 Simultaneous Disbursement and Obligation ................................................................ 33 13.11 Foreign Currency Fluctuations..................................................................................... 33 13.12 Security Guard and Firefighting Services .................................................................. 33 13.13 Postage Obligations Recorded ..................................................................................... 34

14.0 UNRECORDED OBLIGATIONS............................................................................... 34

14.1 Dollar Threshold for Obligations Identified as Not Recorded ..................................... 34 14.2 Document Verification ................................................................................................. 34 14.3 Recording ..................................................................................................................... 35 14.4 Expired Funds .............................................................................................................. 36

15.0 INTERNAL CONTROLS............................................................................................ 36

15.1 Departmental Responsibilities...................................................................................... 36 15.2 Funds Holder Responsibilities ..................................................................................... 36 15.3 Supporting Documentation .......................................................................................... 37 *15.4 Segregation of Duties ................................................................................................... 37 15.5 Antideficiency Act Violations...................................................................................... 37

16.0 QUARTERLY REVIEW OF DORMANT ACCOUNTS............................................... 38

16.1 DAR-Q Justification..................................................................................................... 38 16.2 Dormant Balances ........................................................................................................ 38 16.3 DAR-Q Major Roles and Responsibilities ................................................................... 39 16.4 DAR-Q Populations ..................................................................................................... 43 16.5 Advana DAR-Q Tool ................................................................................................... 43 16.6 Key Supporting Documentation................................................................................... 44 16.7 Documentation ............................................................................................................. 46 16.8 De-obligation of Dormant Obligations ........................................................................ 46

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Financial Management Regulation CHAPTER 8

Volume 3, Chapter 8 *August 2023

STANDARDS FOR RECORDING AND REVIEWING COMMITMENTS AND OBLIGATIONS

1.0 GENERAL

1.1 Purpose

This chapter prescribes the requirements for determining the amount and accounting period in which commitments and obligations must be recorded under various circumstances. Departmental standards for recording transactions in the execution level budgetary accounts are in Chapter 15. This chapter also provides guidelines for the Dormant Account Review Quarterly (DAR-Q) of Undelivered Orders, Unpaid (UDOU); Delivered Orders, Unpaid (DOU); Undelivered Orders, Paid (UDOP); and Unfilled Customer Orders (UFCO). Priorities for researching and correcting disbursement transactions are in Chapter 11.

1.2 Authoritative Guidance

The primary statutory sources include Titles 10 and 31 of the United States Code. The primary regulatory source is the Office of Management and Budget (OMB) Circular A-11, "Preparation Submission and Execution of the Budget"; OMB Circular A-123, Management's Responsibility for Enterprise Risk Management and Internal Control"; and the Federal Acquisition Regulation (FAR).

2.0 COMMITMENTS

2.1 Definition

A "commitment" is an administrative reservation of allotted funds, or of other funds, in anticipation of an obligation (see paragraph 3.1). Since an obligation equal to or less than the commitment can be incurred without further recourse to an authorizing official, commitments are required for some appropriations and are permissible for others. For additional information, see Chapter 15 paragraph 3.3. A commitment, when recorded in the accounting records, reduces the allotment's available fund balance. A person authorized to reserve funds must sign the commitment document, i.e., the official responsible for administrative control of funds for the affected subdivision of the appropriation. This helps ensure the subsequent entry of an obligation will not exceed available funds. The amount recorded as a commitment is the estimated procurement cost set forth in the commitment document. The date the authorized official signed the commitment document determines the accounting period the commitment is recorded in the general ledger. Officials can commit funds only to acquire goods, supplies, and services that meet the time, purpose, and amount for which Congress appropriated funds, or bona fide needs of the period to replace stock used during that period. See subparagraph 3.4.1 for further bona fide need concepts.

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