In certain special cases where an appropriation may be legally "obligated" in lump sum (project orders, etc.) ahead of the time when certain individual obligations are incurred (within the same appropriation and within the lump sum) for salaries, travel, supplies, and other items, the lump sum obligation will be reported as a part of the appropriate object class which was temporarily charged with the transaction (e. g., 08, 09, 11, 16, etc.), and the individual obligations incurred subsequently will be reported as a part of the appropriate object classes (e. g., 01, 02, 05, etc.). In order to avoid duplication in the total, a special entry will be used prior to the total, "Deduct portion of foregoing obligations originally charged to object class..." A "Subtotal" entry will be used ahead of the adjusting entry.

The final entry will be "Total obligations."

In cases where the schedule covers administrative expenses or other limitations on the use of corporate funds, the schedule will be on the same basis as

the limitation. The wording of the headings and stub entries will be adjusted appropriately when the schedule is on a basis other than obligations.

In the case of other revolving funds, the details of this schedule may be on either an obligation basis or accrued expenditure basis. The totals will be consistent with other schedules which are printed for the fund ("Program and financing" or "Statement of sources and application of funds"). If the detail is not on the same basis as the total, appropriate subtotals and adjusting entries will be added to make the bridge between the detail and the totals. Where business-type statements are printed, and the detail of this schedule is on an obligation basis, the sum of the adjusting entries will equal the difference between the outstanding obligations other than liabilities for 2 successive years as shown in the attachment to the statement of financial condition (see section 59). The schedule should be captioned to indicate the basis on which the detail is shown.

SUBMISSION OF ANNUAL BUDGET ESTIMATES

46. Purpose and content of narrative statements.

The activities listed in the schedule of program and financing must be described in a narrative statement. The narrative statement is to furnish information about program and performance (accomplishment of program), suitable for inclusion in the printed budget. A separate brief narrative statement will also be submitted for each supplemental estimate proposed for later transmittal. (A narrative statement is not required in those special cases mentioned at the end of section 50.)

The primary purpose of the narrative statement is to present in summary form the work plan and its expected accomplishment in relation to the financial estimates, together with a measure of program and performance. Narrative statements are not intended to supplant the separate budgetary justifications needed for detailed analysis of the estimates.

Because they are a basic part of the budget, narrative statements should focus on work to be done, services to be rendered, or payments to be made during the budget year. At the same time, each statement should allow comparison with the past and the current fiscal years. Emphasis should be neither on broadly inclusive governmental functions (like regulation of industry) nor on procedural details, but on the essential elements that characterize the individual activity described in the narrative statement.

In view of their purpose, narrative statements should be particularly informative in providing a measure of program and performance. Wherever possible, quantitative data should be based on objective measurement (employee workload, backlogs, unit costs, results achieved, and the like). Such quantitative data should be set forth even if no change in the scope of the program or its financial requirements is proposed.

Narrative statements are to be brief, accurate, and readable. They should aim at ease of understanding. Ease of understanding is promoted by use of full sentences, each of simple structure and centered on the element of action. Narrative statements should not include language that gives the impression of pleading or of unsubstantiated value judgments.

Representatives of the Bureau of the Budget will inform each agency of the maximum space that can be allowed for narrative statements. Drafts must be held within these limits.

47. Form of narrative statements.

The information to be presented in the narrative statements is to be grouped along the lines of individual activities listed in the program and financing schedule (section 41).

As a rule, a paragraph is to be devoted to each activity. The paragraph is to open with the title of the activity, preceded by an arabic numeral. Title and numeral must correspond to the program by activities. Tables containing quantitative data are to be inserted in the text where pertinent. If the activity divides itself into several components (subactivities), these ordinarily are not to be presented in separate paragraphs.

Narrative statements may be preceded by an introductory statement. For each agency and for each major organizational unit carrying out programs under different appropriations, an introductory statement may be used to indicate the agency's or unit's principal programs in relation to one another, with emphasis on the expected accomplishment of program during the budget year. In addition, introductory statements may be used to explain briefly the character of the agency's or unit's functions or work or to present information that relates to several activities described in the narrative statements. Introductory statements may be placed separately or as an opening part of the first narrative statement for the individual agency or major organizational unit.

48. Narrative statements for revolving funds.

The narrative statement for revolving funds will consist of a concise factual description of the enterprise's program and status, present and proposed. The statement will begin with a brief introduction setting forth the present authorized purposes and financial structure of the enterprise, together with any major changes therein during the past year or current year or proposed for the budget year, and then cover the following major topics:

"Budget program"-This section will contain an enumeration of the distinct types of programs or activities carried on or proposed for the ensuing year. The budget program for each of the major activities will be discussed briefly. So far as practicable, the discussion will cover the commitments or program obligations to be entered into for each major program or activity. Administrative expenses will be discussed as the last segment of this section.

32

SUBMISSION OF ANNUAL BUDGET ESTIMATES

"Financing the budget program"-If any significant amounts are shown in the sections relating to financing on statement A (section 57), they should be explained in this section. Total borrowing authority, as well as amounts actually borrowed or repaid, should also be discussed here. The effect on budget expenditures should be mentioned.

"Operating results"-This section will summarize significant information relating to income, expense, and net income or loss. It will also explain any other charges or credits to retained earnings, the steps being taken to dispose of any deficits, and the disposition planned for the net earnings, as shown on statement B (section 58).

In accordance with section 102 of the Government Corporation Control Act, a specific recommendation will be made for each fund under that act as to the action to be taken on the retained earnings or deficit at the end of the past year. If there are retained earnings, the recommendation should indicate the amount to be returned to the Treasury, and the use to be made of any remaining earnings which are retained. If there is a deficit, the recommendation should indicate whether an appropriation should be made to restore the impairment, whether it should be restored by some other means, or whether no action is required.

Where there are significant changes in assets, liabilities, or the Government's investment as shown on statement C (section 59) these changes will be explained briefly in this section. In such cases, the heading of the section should read "Operating results and financial condition."

Side headings will ordinarily be used for each program or activity and for each of the last three sections named above. In cases where the statements are long, however, center headings may be used for the four major sections.

49. Narrative statements for cost-type budgets.

Where the program by activities is presented on a cost-type basis for printing, the narrative should

include an explanation of the adjusting entries which relate total costs to obligations. Wherever the adjusting entry covers an increase or decrease in resources on hand, liabilities, undelivered orders, etc., the narrative will indicate, usually in tabular form, the balances thereof at the start and end of the year. The explanation will cover each year for which an adjusting figure appears in the activity schedule.

Where the explanation can be made in a single paragraph, it will be titled "Relation of costs to obligations." If more than one paragraph is needed, the paragraphs should be titled the same as the respective adjusting entries on the program by activities.

50. Narrative statements in other special cases.

The narrative statement should explain any special circumstances affecting the method of financing the program. For example, in the case of permanent appropriations and trust funds, the narrative statement will indicate the source of money, the purposes of and restrictions upon its use, and the legal citation (since there will be no appropriation text for such items). The citation should be to the U. S. Code or, if a code reference is not available, to the Statutes at Large.

Where two or more accounts finance the same program, the narrative statement for the first account should cover the entire program. Statements for the other accounts should be confined to one or two sentences explaining the character and purpose of the account, and referring to the narrative statement under the first account.

Narrative statements are not required for schedules for "Advances and reimbursements," or for accounts in which there are no balances and no obligations estimated in the budget year and no further appropriations under that title are contemplated (except where a narrative may be desirable to explain the discontinuance of an account).

Sec. 51-52

Net change upward in obligations previously reported for an account which has expired. Adjustments, if any, to reimbursements previously reported in an expired account will be netted against the change in obligations for this line. (A downward net change in obligations is included in the entry "Balance no longer available.")

Sum of the preceding entries.

Expenditures

Wording of entry

Out of current authorizations.

Out of current appropriations to liquidate prior year contract authorizations.

Out of authorizations to expend from subsequent year appropriations.

Out of anticipated supplemental appropriations.
Out of prior authorizations.

[Identify types of authorizations other than appro-
priations.]

In cases where a single schedule contains both permanent and current authorizations, additional subentries will be used to identify the expenditures "out of current authorizations" chargable to each.

Total expenditures (subtotal).

Use only where there are two or more preceding entries.

no longer available (see exhibits 51A, 51B, and 51C). The entries set forth below will be used. Entries not needed will be omitted, and other entries will not be used except by special arrangement with Bureau of the Budget representatives.

Description

Net expenditures, on a checks-issued basis, identified as indicated. In cases where authorizations for two or more different years are merged in one multiple-year or noyear account, these entries will be bracketed and a single amount shown for the past year, since there would be no accounting support for a break between current and prior authorizations. The distribution among the categories indicated will be estimated for the current and budget years in all cases except for trust funds. The sum of these entries for the past year must agree with expenditures which will be reported in the Treasury Combined Statement. (Note that reappropriations or reauthorizations are current authorizations of the year in which they are provided.)

Sum of the preceding entries.

(see entries relating to transfers in section 51).

A mount specifically rescinded by Congress.

Amounts ceasing to be available during or at the end of the year (other than amounts rescinded by law) unless specific action by Congress is taken to extend the availability. These entries will include amounts carried to surplus, administrative cancellation of contract authorizations, estimated savings in accounts expiring for obligation (Including amounts reappropriated or reauthorized by Congress), amounts returned to unappropriated receipts, balances returned to other accounts, net downward adjustments in prior year obligations in annual accounts, etc.

Balances of appropriations or other authorizations carried forward which are available in the subsequent year. This entry will be identical with the balance brought forward at the beginning of the succeeding year. For the past year column, the obligated balance must agree with the amounts included in the report of balances certified under section 1311 for that year. The unobligated balance must agree with the unobligated balance still available for obligation included on the section 1311 report, except for the omission of amounts representing anticipated reimbursements to be credited to a subsequent year's annual appropriation when collected (see section 53).

Sum of the preceding entries. This amount must be identical with "Total budget author izations available" in the first section of the schedule.