Act 1 Jeanna L Pryor Col USAF Director Defense Financial Management a nd Comptroller School 9 November 2012 Overview 2 AntiDeficiency Act History US Codes Prohibitions Penalities ID: 747352
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Anti-deficiency Act
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Jeanna L. Pryor, Col, USAFDirector, Defense Financial Management and Comptroller School9 November 2012Slide2
Overview2Anti-Deficiency Act
History U.S. CodesProhibitionsPenalities
ProvisionsPurpose, Time, and Amount AnalysisSlide3
Overview (continued)3Violation Process
SuspicionsInvestigatingReporting Examples of ADA cases
PreventionSlide4
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Congressional “Power of the Purse”Agencies routinely overspentADA is the greatest power that Congress has over the Executive BranchSeries of acts started in 1870Additional provisions made in 1905, 1906, 1951 and 1956
Copyright 2012 Arnold Federal Consulting
History 5Slide6
The Anti-deficiency Act prohibits federal employees from 31
U.S.C. § 1341(a)(1)(A):
Making or authorizing an expenditure from, or creating or authorizing an obligation under, any appropriation or fund in excess of the amount available in the appropriation or fund unless authorized by law. 31
U.S.C.
§ 1517(a): Making obligations or expenditures in excess of an apportionment or reapportionment, or in excess of the amount permitted by agency regulations. U.S. Codes6Slide7
31 U.S.C. § 1341(a)(1)(B):
Involving the government in any obligation to pay money before
funds have been appropriated for that purpose, unless otherwise allowed by law. 31 U.S.C.
§ 1342: Accepting
voluntary services for the United States, or employing personal services not authorized by law, except in cases of emergency involving the safety of human life or the protection of property.. Federal employees who violate the Anti-deficiency Act are subject to two types of sanctions: administrative and penal. Employees may be subject to appropriate administrative discipline including, when circumstances warrant, suspension from duty without pay or removal from office. In addition, employees may also be subject to fines, imprisonment, or both. U.S. Codes (continued)7Slide8
Prohibits federal employees from…Making obligations or expenditures in excess of the amount available in the appropriation/fund unless authorized by law. Making obligations or expenditures in excess of the amount available in the
apportionment or reapportionment, or in excess of the amount permitted by agency regulations
Prohibitions8Slide9
Any obligation to pay money before funds have been appropriated for that purpose, unless otherwise allowed by lawAccepting voluntary services or employing personal services not authorized by law, except in cases of emergency involving the safety of human life or the protection of property (31 U.S.C. & 1342)
Prohibitions (continued)
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Penalties10
Criminal Penalties“Knowing or willful” violations are
feloniesFine <$5,000 / Imprisonment <two years, or bothCivil PenaltiesAdministrative disciplineSuspension without pay or removal from officeMost cases go unpunished or administrative action onlySlide11
AugmentationReceiving funds from a source without statutory authority, then obligating those funds is a violationExtension ofMiscellaneous Receipts Statute (31 USC 3302)Purpose Law (31 USC 1301)Supplementation of salar
y (18 USC 209)IndemnificationUnlimited indemnification is an automatic violation ((even when no dollars are involved)
Copyright 2012 Arnold Federal ConsultingProvisions11Slide12
Purpose, Time, and Amount(PTA) Analysis12
O
nly
use appropriations for the
purposes for which the appropriation was made; for the time period for which the appropriation is made; and in the amount appropriated by CongressObligating funds for a purpose other than for which funds were appropriated is the most common ADA violationMost cases involve using the wrong “color” of money (O&M vs. procurement)Slide13
Violation of Purpose Law and Bona Fide Need ruleMay or May Not violate the ADACorrectable Purpose and Time violations that do not result in an Amount problem are considered accounting adjustmentsFunds were available at the time the obligation occurred and still available to correct the violation
Some Purpose and Time violations automatically are ADA violations Copyright 2012 Arnold Federal Consulting
Relationship to Purpose and Time13Slide14
A FISCAL "PHILOSOPHY"THE SUPREME COURT
"The established rule is that theexpenditure of public funds is
properonly when authorized by Congress,NOT that public funds may be expended unless prohibited by Congress."
United States v.
MacCollom,426 U.S. 317 (1976)Slide15
ADAs are usually identifiedDuring audits (internal to Agency or GAO)Change over of personnel question fundingRequest for increase funding to existing long-term projectLaunch an inquiry with Agency legal or fiscal policy office for determination
Facts indicate an ADA may have occurred; launch a formal investigation
Violation Process Suspension15Slide16
Agency Comptroller notified/briefed on inquiry findingsComptroller appoint by letter an Investigating Officer (IO) and timeframe to complete investigationInvestigating Officer compete IO training or certify training has been previously completedReviews inquiry resultsConducts investigation Use inquiry results as a baseline starting point
Violation Process
Investigation16Slide17
Follow the money and document trailInterview relevant personnel (sworn statements/transcribe)Validate accounting transactionsValidate meeting minutesReview appropriations, Congressional testimony and hearings, contracts, etc.Determine Congressional intentReport findings and responsible person
Violation Process
Investigation (continued)17Slide18
Report findings and responsible personObtain legal review of the report and findsGet concurrenceNotify responsible person Get written concurrence or rebuttalNotify Agency Comptroller and supervisorObtain punishment and/or penalties decision
Violation Process
Investigation (continued)18Slide19
Letter reporting the violation is submitted by the Agency Comptroller to:President Congress The Office of Management &
BudgetComptroller General Contains all relevant facts and
corrective actions taken to preclude future occurrenceViolation ProcessReporting
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Transmittal LetterTitle and Treasury symbol (including the fiscal year) of the appropriation or fund accountAmount involved for each violation, Date on which the violation occurred.
Name and position of the officer(s) or employee(s) responsible for the violation Facts pertaining to the violation, to include violation type
Statement of the administrative discipline imposed and any further action(s) taken with respect to the officer(s) or employee(s) involved in the violationViolation ProcessReporting
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Violation Letter Sample21Slide22
39 Reports – 26 were DoD19 of DoD’s 26 were Purpose violations4 of 19 were unauthorized purchasesRemaining 5 of 19 were wrong appropriations10 of 15 were O&M
, R&D, Procurement, DWCF in lieu of MILCON5 of 15 were
O&M and DWCF in lieu of R&D, Procurement or Capital Budget AuthorityLargest was $1,429,332,309 smallest $0ADA Cases FY 10 & 11
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Communication Equipment Bona Fide NeedAcquisitions system hardware requirements and increased delivery costs Used FY03 O&M funds vs. FY04
FY04 funds were not available to make an accounting correctionDepartment of the Air ForceFY04
$9,077,69031 USC 1517(a)(2)Case GAO# 11-0423Slide24
Contracts crossing multiple fiscal yearsSeverable contracts exceeded twelve month period funding funding with one fiscal year fundsSeverable contract service begun in subsequent fiscal yearDepartment of Health & Human SvsFY 02-10
$1,429,332,30931 USC 1341(a)Case GAO# 11-23
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ConstructionProjects and site prep were divided into multiple discrete projects each below the statutory threshold
Each project was funded with OMA dollarsDepartment of the Army
FY04 and FY05$15,449,992.49 and $11,806,99331 USC 1341(a)(1)(A)Case GAO# 10-07, 10-10
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Period of PerformanceContract to analyze drinking water samples from August 04-06Funds were legally available FY04 – FY05Environmental Protection Agency
FY04$193,54531 USC 1541(a)(1)(B)
Case GAO# 10-1226Slide27
AugmentationAmounts received from private sector for work performed were collected as reimbursements and then obligated.Department of NavyFY02-10$561,906, $285,987 & $842,857(31 USC 1517)
Case GAO # 06-15, 10-13 and 10-14
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Preventing Violations28Slide29
Internal ControlsInclude ADA as a focus area during annual reviewsTrainingAppropriation Law classes for both Fiduciary and Pecuniary certifiers and decision makersRead your appropriation act each yearGet an interpretation from GAOGet GAO emails with latest decisionsReview GAO database for ADA violations
Copyright 2012 Arnold Federal Consulting
Preventing Violations29Slide30
Promptly and accurately record obligationsRemind managers about voluntary servicesPay attention to Government Purchase Cards purchasesQuestion transactions that are unusual or just don’t look rightIf you have doubts about a transaction, resist pressure for immediate actionMake friends with your agency legal office
Copyright 2012 Arnold Federal Consulting
Preventing Violations (continued)30Slide31
31Questions?