1. Basic features of the Regulation.

This Regulation is issued pursuant to section 3679 of the Revised Statutes as amended (31 U. S. C. 665) ; the Budget and Accounting Act, 1921, as amended (particularly section 213, 31 U. S. C. 21) and the Budget and Accounting Procedures Act of 1950 (particularly section 114, 31 U. S. C. 66b (a), (b)). The Regulation relates to apportionments and reports on the status of appropriations and other authorizations, and is designed to serve the purposes of information and control in the execution of the Government's budgetary and financial programs.

The basic features of this Regulation are as follows:

(a) The Director of the Bureau of the Budget will continue to make apportionments on an obligation basis, with respect to appropriations and other authorizations which are enacted by Congress on an obligation basis. Provision is made for apportionments below the appropriation level, and for apportionments for various time periods within the year or for the year as a whole.

(b) The Director of the Bureau of the Budget will make apportionments on an accrued expenditure basis for the Government corporations and other funds which by law are placed upon a business type, accrual basis. In the case of amounts not subject to a fiscal year limitation, the apportionments will generally be made in a single sum for the year as a whole. Items subject to fiscal year limitations will generally be apportioned quarterly.

(c) Apportionments cover programs and requirements financed through appropriations and other authorizations for payments from the Treasury. Exemptions from apportionment are provided for amounts held in trust, and for certain other items as authorized by law.

(d) Agencies are to submit information on the amounts available for apportionment and their request for apportionments for the year, prior to the beginning of each fiscal year or promptly after the passage of an appropriation act.

(e) Reapportionments will be made whenever necessary. In addition to considering requests for reapportionments which may be submitted by the agencies, the Director of the Bureau of the Budget will make a periodic review of financial requirements at least four times during the year.

(f) In making apportionments and reapportionments, reserves will be established where possible for savings and contingencies.

(g) Agencies are to provide a system of administrative control to restrict obligations or expenditures, and to fix responsibility for violations of the system. Provision is made for reports on violations of the system and on certain other violations of law, as required by statute.

(h) Agencies are to furnish reports on the status of all apportioned accounts. The reports will generally be at monthly intervals, except that reports pertaining to apportionments on an accrual basis will generally be quarterly.

(i) In addition, the reports are to reflect the status of all accounts not subject to apportionment, except deposit fund accounts.

(j) The reports are to be compiled on the basis of the accounting records of the agencies, or be susceptible of ready reconciliation therewith. However, agencies are expected to reconcile their reported balances with the balances reported by the Treasury Department at least annually.

(k) Flexibility is provided in the reports on the status of appropriation accounts by allowing for the reporting of accrued expenditures by those agencies whose accounts are maintained on that basis. However, the reporting of accrued expenditures is not required from agencies which are not prepared to do so.

(1) Charges and credits between appropriation accounts are to be reported by the agencies concerned on a basis consistent with the treatment to be given them in the Budget and in Treasury reports. The Regulation explains the various classes of such transactions as now defined, and the reporting treatment for each class.

(m) The Regulation contains revised descriptions of various terms, explains concepts of obligations and accrued expenditures, and defines the categories in the uniform object classification.

regular channels.

3. Questions on Regulation.

Questions involving the amounts available for apportionment, and the amounts of apportionments, reapportionments, and reserves should be submitted to the Bureau of the Budget. Similarly, questions pertaining to any other matters which involve the exercise of discretion by the Director of the Bureau of the Budget shall be submitted to the Bureau. Questions pertaining to the classification according to objects (for use in preparing annual budget estimates) should also be submitted to the Bureau of the Budget. All other questions pertaining to the Regulation should be submitted to the Bureau of Accounts of the Treasury Department.

11. Purpose and nature of apportionments.

Section 3679 of the Revised Statutes, as amended, provides for financial apportionments and reapportionments to be made by the Director of the Bureau of the Budget. Such apportionments and reapportionments shall be binding upon each agency in controlling the execution of its budgetary plans.

Authority to make apportionments or reapportionments has been delegated generally to the Chiefs of Divisions of the Bureau of the Budget, but this authority may also be exercised in particular instances by the Director or the Assistant Director.

The law provides that all appropriations or funds subject to apportionment and available for obligation for a definite period of time shall be so apportioned as to prevent obligation or expenditure thereof in a manner which would indicate a necessity for deficiency or supplemental appropriations for such period; and that all appropriations or funds not limited to a definite period of time, and all authorizations to create obligations by contract in advance of appropriations, shall be so apportioned as to achieve the most effective and economical use thereof.

The law further provides that no officer or employee of the United States shall authorize or create any obligation or make any expenditure in excess of an apportionment or reapportionment, or in excess of the amount permitted by agency regulations for administrative control under apportionments (see section 13).

Two systems of apportionment are provided in this Regulation:

(a) Apportionments on an obligation basis. In all cases where funds have been made available by an act of Congress on an obligation basis and where obligations for the future payment of money may not be incurred in excess of the amounts to the credit of the account or fund, the apportionments will be on an obligation basis (see sections 32 and 33 herein). This system applies to all accounts and funds except those which are within the scope of the second system of apportionments referred to in the next paragraph.

(b) Apportionments on an accrued expenditure basis.-In those cases where authorizations or limitations set by Congress are on an accrual basis, and the law permits obligations for the future payment of money to be incurred without being limited to the amount currently available in a fund, the apportionments will be on an accrued expenditure basis (see sections 52 and 53 herein). This system applies primarily to enterprises subject to

the Government Corporation Control Act, to those subject to any other law which provides for "business-type" budgeting and accounting, and (on determination by the Bureau of the Budget) to working capital and other revolving funds established for intragovernmental operations.

12. Data for making apportionments.

Pursuant to subsection (d) (2) of section 3679 of the Revised Statutes as amended, information required by the Director of the Bureau of the Budget for use in making apportionments shall be submitted in the form of an apportionment schedule or a reapportionment schedule (together with any supplementary data needed) as prescribed in sections 32, 33, 52, and 53 of this Regulation. The Director of the Bureau of the Budget is required by law to make the apportionment, and to notify the agency concerned of his action not later than 20 days before the beginning of the fiscal year, or not more than 30 days after the enactment of the appropriation act, whichever is later.

Approval of the apportionment is not to be regarded as resolving any question as to the legality of using funds for the purpose for which apportioned. If there is any question as to the legality of using funds for a particular purpose, it is the responsibility of the agency to resolve such question. Approval of the apportionment does not imply approval of or concurrence with any comments inserted on the form by the agency.

Reports as required under sections 41, 42, and 54 of this Regulation, together with other available information, will be used in the periodic review of apportionments, both by the agency concerned and by the Bureau of the Budget. On the basis of such review, each agency shall promptly initiate requests for reapportionments as are appropriate. The Director of the Bureau of the Budget may also initiate reapportionments on the basis of such review.

13. System of administrative control under apportionments.

Any appropriation or fund which is apportioned may be subdivided administratively within the limits of such apportionments. Section 3679 of the Revised Statutes, as amended, requires the head of each executive agency, subject to the approval of the Director of the Bureau of the Budget, to prescribe, by regulation, a system of administrative control (not inconsistent with any accounting procedures prescribed by or pursuant to law) which shall be designed to (a) restrict obligations or expenditures against each such appropriation or fund to the amount of apportionments or reapportion

ments made for each such appropriation or fund, and (b) enable the agency head to fix responsibility for the creation of any obligation or the making of any expenditure in excess of an apportionment or reapportionment.

The systems of apportionment provided in this Regulation permit inclusion of estimated reimbursements, transfers, income, etc. (but not anticipated additional appropriations not yet enacted) in determining the amounts available for apportionment. The inclusion of such estimates in determining the amounts available for apportionment in no way authorizes an agency to obligate or expend in excess of the amounts to be realized from such sources. The system of administrative control should therefore be designed to keep obligations or expenditures from exceeding apportionments or from exceeding the amounts which will actually be realized, whichever is the smaller, and preferably should be an integral part of the accounting system.

Four copies of the regulation covering the proposed system of administrative control under apportionments and any proposals for subsequent revisions thereto shall be submitted to the Director of the Bureau of the Budget for approval. In the case of a newly created agency, the proposed system of administrative control shall be submitted to the Director within 90 days after the establishment of such agency. The Director of the Bureau of the Budget will indicate to the agency concerned the action taken in this regard within 30 days after the receipt of the proposed regulation.

14. Purpose and nature of financial reports.

Financial reports are required in order to provide essential information in connection with the formulation and execution of the Government's budgetary program.

The reports contemplated by this Regulation have been designed to show on a consistent basis and in practicable detail the budgetary status of appropriations or funds and financial data related thereto.

The data required by this Regulation shall be compiled on the basis of the accounting records of the respective agencies, or shall be susceptible of ready reconciliation therewith.

The requirements as to the reporting of obligation data under this Regulation are not intended to infer that the several agencies should not record in their official accounts such other commitments or administrative reservations as may be necessary to guard against incurring a deficiency. Likewise, the requirements as to the reporting of accrued expenditure data (for business-type accounts) are not intended to infer that the several business-type enterprises should not exercise such caution as is needed

in the making of commitments or the incurring of obligations, in order to guard against exceeding the expenditure limitations or other limitations which may apply to them.

15. Information to be reported on violations.

Section 3679 of the Revised Statutes, as amended, provides in subsection (1) that there shall be furnished to the President, through the Director of the Bureau of the Budget, and to the Congress, information on violations of the following character:

(a) Any case where an officer or employee of the United States has made or authorized an expenditure from or created or authorized an obligation under any appropriation or fund in excess of the amount available therein.

(b) Any case where an officer or employee of the United States has involved the Government in a contract or other obligation for the payment of money for any purpose in advance of appropriations made for such purpose, unless such contract or obligation is authorized by law.

(c) Any case where an officer or employee of the United States has accepted voluntary service for the United States or employed personal services in excess of that authorized by law, except in cases of emergency involving the safety of human life or the protection of property.

(d) Any case where an officer or employee of the United States has authorized or created an obligation or made an expenditure in excess of an apportionment or reapportionment.

(e) Any case where an officer or employee of the United States has authorized or created an obligation or made an expenditure in excess of the amount permitted by the regulations prescribed and approved pursuant to section 13 herein.

A report containing such information shall be made immediately after the violation becomes known. The report shall be in the form of a letter (original and two copies) to the President signed by the head of the agency and forwarded to the President through the Director of the Bureau of the Budget.

The letter to the President shall set forth: (a) The name and position of the officer or employee responsible for the violation.

(b) All the pertinent facts of the violation, including any statement of the responsible officer or employee with respect to any circumstances which he believes to be extenuating.