Fiscal Law Overview
50 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What does the acronym PTA stand for in fiscal law?

  • Purpose, Time, and Amount (correct)
  • Purpose, Time, and Allocation
  • Planned Timeframe and Amount
  • Purpose, Timing, and Amount

    • Which document gives budget authority for making purchases?

  • Authorization Legislation (correct)
  • Appropriation Bill
  • Fiscal Policy Framework
  • Treasury Regulations

    • What is the main requirement stated in the US Constitution regarding drawing money from the Treasury?

  • It mandates budget approval within 30 days
  • It prohibits any federal spending
  • It requires Congressional majority approval
  • It requires authorization through appropriations made by law (correct)

    • Why is understanding fiscal law important for financial managers?

    <p>It helps ensure all taxpayer dollars are spent legally</p> Signup and view all the answers

    Which act requires financial managers to be familiar with its provisions?

    <p>Anti-Deficiency Act</p> Signup and view all the answers

    Which phase does not involve spending taxpayer dollars?

    <p>Prior to both Authorization and Appropriation</p> Signup and view all the answers

    What is the primary characteristic of annual appropriations?

    <p>Available for a specified fiscal year</p> Signup and view all the answers

    Which of the following appropriations is available for a definite period over one fiscal year?

    <p>Multi-year appropriations</p> Signup and view all the answers

    What differentiates no-year appropriations from annual and multi-year appropriations?

    <p>They remain available for their original purposes until expended</p> Signup and view all the answers

    Which statement is true regarding the Bona Fide Need Rule?

    <p>Funds must be obligated for needs existing within the fiscal year</p> Signup and view all the answers

    Which appropriations are generally structured to presume annual appropriations?

    <p>Any appropriations act unless stated otherwise</p> Signup and view all the answers

    What is the typical validity duration for Procurement funds under multiple-year appropriations?

    <p>3 years</p> Signup and view all the answers

    What is the primary condition for the expenditure of public funds according to established rules?

    <p>Funds can be expended only if Congress has specifically authorized it.</p> Signup and view all the answers

    Which statement best represents the Purpose Statute?

    <p>Funds may only be spent for specific purposes authorized by Congress.</p> Signup and view all the answers

    What is the significance of Article I, Section 9 in fiscal law?

    <p>It establishes that appropriations must be specifically authorized to be valid.</p> Signup and view all the answers

    Which is NOT one of the approaches that a financial analyst should take when faced with a fiscal law issue?

    <p>Determine whether the appropriation is necessary for other government programs.</p> Signup and view all the answers

    What percentage of ADA violations are related to the Purpose Statute?

    <p>90%</p> Signup and view all the answers

    Why was the Purpose Statute enacted in 1809?

    <p>To limit the discretion of Executive Branch agencies in spending appropriations.</p> Signup and view all the answers

    In what manner must Congress express authorization for fund expenditures?

    <p>By passing an authorization bill detailing possible uses of funds.</p> Signup and view all the answers

    What can be inferred about the authority of a four-star general purchasing a car with government funds?

    <p>Lack of prohibition does not equate to authorization for such purchases.</p> Signup and view all the answers

    What is the primary requirement of the Necessary Expense Rule?

    <p>The expenditure must have a logical relationship to the appropriation.</p> Signup and view all the answers

    Which of the following is NOT a part of the three-part test for expenditures?

    <p>The expenditure must be scrutinized annually.</p> Signup and view all the answers

    Which example does illustrate a proper purchase under the Necessary Expense Rule?

    <p>Purchasing seasonal decorations consistent with work-related objectives.</p> Signup and view all the answers

    Why can tuxedos be purchased for Secret Service agents?

    <p>They pass the three-part test of the Necessary Expense Rule.</p> Signup and view all the answers

    What aspect does the Time Statute focus on regarding appropriations?

    <p>The duration for which appropriations are available.</p> Signup and view all the answers

    Which of the following expenditures is likely to be prohibited?

    <p>Buying a personal gift for an employee.</p> Signup and view all the answers

    How does Congress address the items that can be purchased with lump-sum appropriations?

    <p>By allowing agencies to exercise reasonable discretion.</p> Signup and view all the answers

    What happens if an agency does not obligate its appropriations during the established period?

    <p>The authorization for the appropriations expires.</p> Signup and view all the answers

    What is a factor that would invalidate a government expenditure?

    <p>It is specifically provided for in another budget.</p> Signup and view all the answers

    All the following describe factors in considering whether an expense can be made EXCEPT:

    <p>The expense must be notified to the public.</p> Signup and view all the answers

    What is the primary focus of the Necessary Expense Rule?

    <p>To apply a three-part test to verify the legality of expenditures.</p> Signup and view all the answers

    Which of the following statements about the Time Statute is correct?

    <p>It requires agencies to obligate appropriations within a specified time frame.</p> Signup and view all the answers

    What condition would make a purchase of decorations for office areas permissible?

    <p>They are consistent with work-related objectives.</p> Signup and view all the answers

    Which criterion does NOT apply when assessing expenditures according to the Necessary Expense Rule?

    <p>Compliance with the annual budget limits.</p> Signup and view all the answers

    Which purchase would most likely violate the Necessary Expense Rule?

    <p>Civilian clothing for casual Fridays.</p> Signup and view all the answers

    What does fiscal law require before the federal government can make any purchases?

    <p>Authorization from Congress through a committee process</p> Signup and view all the answers

    What is the relationship between the authorization bill and the appropriation bill?

    <p>The authorization bill gives the budget authority to make purchases, while the appropriation bill provides the actual funds.</p> Signup and view all the answers

    Which statement best captures the implications of the Anti-Deficiency Act (ADA)?

    <p>Funds cannot be spent unless there is prior appropriations made by law.</p> Signup and view all the answers

    Under fiscal law, what happens to an agency's appropriations if they do not obligate them during the established period?

    <p>The funds will be returned to the Treasury and can no longer be used.</p> Signup and view all the answers

    What aspect is primarily focused on by the Time Statute concerning appropriations?

    <p>The duration in which appropriated funds must be spent</p> Signup and view all the answers

    What is required for a budget to qualify as a no-year appropriation?

    <p>The appropriating language must express that it remains available until expended.</p> Signup and view all the answers

    Which statement accurately describes annual appropriations?

    <p>They are limited to expenditures during the specified fiscal year.</p> Signup and view all the answers

    What distinguishes multiple-year appropriations from annual appropriations?

    <p>They are available for obligations across multiple years for a set period.</p> Signup and view all the answers

    Which of the following is NOT an example of a multiple-year appropriation?

    <p>Personnel appropriations for the duration they are mandated.</p> Signup and view all the answers

    What is a critical condition imposed by the Bona Fide Need Rule?

    <p>Obligations must relate to needs occurring within the fiscal year for which the funds are appropriated.</p> Signup and view all the answers

    What does the standard language for no-year appropriations imply?

    <p>They can be used without any spending limits until they are fully expended.</p> Signup and view all the answers

    How are appropriations presumed if the appropriations act does not specify otherwise?

    <p>They are presumed to be annual appropriations.</p> Signup and view all the answers

    Which type of appropriations is typically used for routine activities of the federal government?

    <p>Annual appropriations.</p> Signup and view all the answers

    Which statement about annual appropriations is true?

    <p>They are only valid for obligations incurred during the fiscal year.</p> Signup and view all the answers

    Which of the following is true regarding the treatment of funds under no-year appropriations?

    <p>The appropriated funds can remain available indefinitely until utilized.</p> Signup and view all the answers

    Study Notes

    Fiscal Law

    • Fiscal law is the foundation of the Finance career field
    • It is important for Financial Managers (FM) as it deals with: the availability of appropriations, the United States Constitution, Purpose, Time, and Amount (PTA), and the Anti-Deficiency Act (ADA).
    • Fiscal law originated from Article I, Section 9 of the US Constitution which states "No money shall be drawn from the Treasury, but in consequence of Appropriations made by law."
    • Congress authorizes money through authorization bills and appropriates funding through appropriation bills, both are needed for spending.
    • The expenditure of public funds is only proper when established by Congress.

    Purpose Statute

    • This Statute dictates that funds may only be spent for purposes expressly authorized by Congress.
    • It is one of the most violated ADA statutes.
    • Determines if an appropriation expenditure is:
      • For a particular statutory purpose, necessary and incident to the proper execution of the general purpose of the appropriation
      • Not prohibited by law
      • Not otherwise provided for

    Necessary Expense Rule

    • This is the foundation of the Purpose Statute.
    • Applies to all purchases and requires the following tests:
      • Logical relationship: Is the purchase connected to completing the mission?
      • Not prohibited by law: Is the purchase explicitly prohibited by law?
      • Not funded elsewhere: Is something else already funding this purchase?
    • Examples
      • Tuxedos for Secret Service agents, as it passes all three tests.
      • Seasonal decorations for office areas, are acceptable as long as they are consistent with work-related objectives.

    Time Statute

    • Dictates the time period appropriations are available for new obligations.
    • There are three types of appropriations based on availability time:
      • Annual
      • Multiple-year
      • No-year

    Annual Appropriations

    • Available for new obligations during a specific fiscal year.
    • O&M and Personnel appropriations are annual.
    • All appropriations are assumed to be annual unless stated otherwise.

    Multiple-Year Appropriations

    • Available for new obligations over a period longer than one fiscal year.
    • Examples:
      • Research, Development, Test, & Evaluation (RDT&E) funds (2 years).
      • Procurement funds (3 years).
      • Military Construction funds (5 years).

    No-Year Appropriations

    • Available for new obligations without fiscal year limitation.
    • The appropriating language must expressly state "to remain available until expended" or similar language.
    • Examples: DoD Working Capital and Base Realignment and Closure (BRAC) funds.

    Bona Fide Need Rule

    • A fiscal year appropriation may be obligated only to meet a legitimate, or bona fide need arising in the fiscal year the appropriation was made.
    • Examples of exceptions to the rule:
      • Lead-time exception - Agencies can purchase something in one FY and deliver it in the next FY if it takes a long time to receive the item.
      • Training - Training is an authorized expense, as long as it is deemed necessary regardless of when it is delivered.
      • Stock-level exception - Allows agencies to purchase enough items to keep a sufficient stock level.

    Amount Statute

    • Congress sets limits on the amount of available funds.
    • Goverened by the Anti-Deficiency Act (ADA).

    Anti-Deficiency Act (ADA)

    • The ADA ensures the government does not spend more than what is appropriated.
    • Main parts of the ADA: 31 USC 1341, 1342, and 1517.
    • Title 31 USC 1341: Prohibits obligating or expending funds in advance or exceeding the appropriation.

    Fiscal Law

    • Fiscal law governs the spending of federal funds.
    • No money can be spent unless Congress authorizes it first.
    • The authorization bill grants budget authority, but not money.
    • Appropriation bills determine the amount of money that can be spent.
    • The US Constitution, Article I, Section 9 states "No money shall be drawn from the Treasury, but in consequence of Appropriations made by law."
    • The Necessary Expense Rule states that spending must be:
      • Logically related to the purpose for which the funds were appropriated.
      • Not prohibited by law.
      • Not funded elsewhere.

    Time Statute

    • The Time Statute states that Congress appropriates funds for a specific period of time.
    • Agencies must obligate their appropriations within this time frame.
    • There are three types of appropriations based on availability:
      • Annual Appropriations: Available for one fiscal year.
      • Multiple-Year Appropriations: Available for a period longer than one fiscal year.
      • No-Year Appropriations: Available for an unlimited time period.
    • Multiple-Year Defense Appropriations:
      • Research, Development, Test, & Evaluation (RDT&E) funds: 2 years.
      • Procurement funds: 3 years.
      • Military Construction funds: 5 years.
    • Bona Fide Need Rule: Funds can only be obligated to meet a legitimate need arising within the fiscal year for which the appropriation was made.

    Exceptions to the Bona Fide Need Rule:

    • Lead-time exception: Allows agencies to purchase items in one fiscal year but receive them in the next if it takes an extended time to receive the item.
    • Training: Authorized expense if an approving official deems the required training necessary, regardless of when it will be delivered.
    • Stock-level exception: Allows agencies to purchase enough items to maintain a sufficient stock level to avoid delays in operations.

    Amount Statute

    • Congress limits not only the purposes and timeframe for spending but also the amount of available funds.
    • The Anti-Deficiency Act (ADA) governs the amount statute.
    • The ADA prohibits obligating or expending funds before the appropriated amount or beyond the appropriated amount.

    Standard Financial Information Structure (SFIS)

    • SFIS is a common language for data elements used for budgeting, financial reporting, accounting, and interoperability across the DoD.
    • It standardizes financial reporting at the DoD level.
    • Guidance on SFIS can be found in DAFMAN 65-604, DoD FMR Volume 1, Chapter 4 and the SFIS webpage.
    • The SFIS includes flex fields, symbols, and codes used in accounting systems and budget management.

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Related Documents

    6F051O Module 2 Foundations of the Combat Comptroller PDF

    Description

    This quiz covers the essentials of fiscal law, crucial for Financial Managers. It explores appropriations, the Anti-Deficiency Act, and the legal foundation laid by the US Constitution. Understanding these principles is vital for effective public fund management.

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser