Summary

1. Summary As outlined in this chapter, many accounting tasks are performed on a periodic basis within USAID. These include preparing the budget and submitting it for approval, reviewing and recording budget allowances, commitments, obligations, and disbursing the funds. It is important to understand the nature of these tasks, how they are related, and the responsibilities for each of them. The specific responsibilities and processes involved will be covered in the chapters which follow this overview.

2. Summary United States federal budgeting is a lengthy and complex process involving many players. The charts in this chapter present the relationship of these players and the flow of an annual budget through the various levels of submission, review, approval, funding, and the breakdown of the approved funds into the detailed elements of fund accounting.

3. Summary The authority for all funding of agencies of the United States, such as USAID comes from the U.S, Congress by way of an appropriation act. This authority is referred to as the power of the purse. An appropriation act determines the amounts and uses of funding that will be made available based on budgets submitted by the agency . Funds are made available through the United States Treasury. The terms of their use including the funded organization and time period funds are available for are designated by special coding. Fund reference tables are included in Phoenix to identify the coding used by the treasury.

4. Summary The State F Framework was implemented to provide a more cohesive approach to foreign assistance rendered by the United States Government, mostly through the State Department and USAID. The primary effect of the framework is the use of standardized categorization of all foreign assistance activities in budgeting and accounting functions. It is important to understand the framework now in use, i.e. Program Areas, Elements, and Sub-elements, and that activities prior to this implementation are maintained under the old categorization i.e. Strategic Objective, Activities, Sub-activities.

5. The budgeting process includes the following seven steps: appropriation, apportionment, allotment, allowance, sub-allowance, distribution, and activity. The sub-activity is the lowest level and may or may not be utilized depending on the operating unit’s preferences. Funds may not be disbursed until they are broken down into the lowest necessary level in Phoenix using the AY Document. Summary Budget queries are provided in Phoenix to verify the breakdown. Errors must be corrected with a new AY document. This chapter walks through the steps of creating the budget in Phoenix and provides a Budget Query Quick Reference List that allows the user to find the various field needed and know what is required in that field.

6. Summary Commitments are established to ensure that funds are available when an obligation (or sub-obligation) is issued.  An obligation is an order for goods or services with a promise of payment when completed according to specific terms.  This chapter includes the definition of terms involved in the processes of commitment and obligations and subsequent adjustments that may be required.  Throughout the processes it is important to take note of the internal controls that are maintained in order to ensure proper authorization, accuracy, and completeness.

7. Summary Manage-to-Budget is a strategic framework designed to measure operating efficiency within the Agency. Targets have been established for the ratio of operating and administrative costs to total spending. Standardized coding in the form of EOCC is a necessary element of Manage-to-Budget and allows tracking and monitoring of costs within each unit of the Agency.

8. Summary This chapter presents the basic principles of appropriations law. Appropriations shall be used solely for the purposes which they are made, and no others. The accountant is responsible for determining whether an expense is directly related to a program or is an indirect cost that needs to be charged to an operating expense. There are special rules which apply to personnel costs, including the prohibition of split funding of personnel hired under Personal Service Contracts.

9. USAID funded programs may be carried out with various levels of involvement and control by the Agency. Acquisition implementation generally involves USAID contracting directly with third parties to provide required property or services. Assistance is a form of sponsorship where USAID provides funding to allow the recipient to pursue program goals with less control and involvement from the agency. Summary A number of factors including experience in the area must be considered in selecting the appropriate type of implementation. If USAID intends to exercise substantial operational control over the program, assistance implementation is not appropriate. The chapter covers various types of direct contract arrangements used in acquisitions and six types of financing which may be used when assistance is provided.

10. A Bilateral Acquisition starts when a Bilateral Commitment Document is created in Phoenix to record an initial agreement with a host country. This document reserves the needed funds. After signature and approval, this document is converted to a Bilateral Obligation and the commitment is closed out. Funding amount differences between commitment and obligation may be held for subsequent obligation or refunded to the budget. Sub-commitment and obligation follow a similar process and at this level, specific vendors are identified and funding is reserved for the specific activities covered under the agreement with the host country. Summary A Unilateral Acquisition is similar to a Bilateral Acquisition except that they are signed with or issued to individuals or entities without being under an agreement with a host government.

11. Summary Global Acquisition and Assistance System (GLAS or GLAAS) is a web-based, commercial off-the-shelf procurement system and will be implemented throughout USAID. GLAAS will replace NMS, A&A, ProDoc and various other legacy systems used throughout the agency. GLAAS interfaces with the Phoenix Financial Management System.

12. Summary Pipeline is the portion of funding that is obligated but not expended. Pipeline funds have various impacts on the agency or mission and must be handled in accordance with proper regulations. Forward funding may occur in certain situations to make use of excess funds and is also subject to important guidelines. Under certain circumstances, funds should be de-obligated. It is important to have the ability to recognize these situations.

13. Summary Funds move through the budget cycle from appropriation by Congress down to ayailability for obligation by the various missions. The obligations must be valid and follow general standards for fund control. Funds control violations occur as Anti-Deficiency Act violations and Agency Administrative violations. These violations are handled and penalties incurred on a case by case basis.

14. Summary The web-tool is used to increase the efficiency of reporting at the end of periods for certain assets and accruals. Included in the web-tool reporting process are property, plant and equipment; payroll-related accruals, operating leases, capital leases, and personal property sales proceeds. Certain review and approval actions are required before the Phoenix coordinator makes imprest fund balances and year-end validations available in the web-tool.

15. Summary Accrual basis accounting is required by Generally Accepted Accounting Principles (GAAP) and by USAID policy. This means that at then end of an accounting period such as a fiscal quarter, the value of goods and services received but not paid for or posted as a liability must be estimated. Accruals are not required for obligations under $10,000 or when the remaining balance would be under $2,000 and are calculated at the sub-obligation level. The CTO is responsible for accrual calculation and documentation under the guidance of the FM who verifies and records the accrual amounts.

16. The International Cooperative Administrative Support Services (ICASS) system is the principal means by which the U.S Government provides and shares the cost of common administrative support to its various agencies overseas. The ICASS program only charges customer agencies the cost of the service inputs. These charges are calculated on a variety of usage criteria. Summary Some services are required through ICASS but most are available at the discretion of the mission. Each year the expected service requirements are communicated in the form of a budget. There are notification requirements if an ICASS service is no longer desired.

17. Summary Development Credit Authority(DCA) is a broad, general funding authority enacted by Congress that allows USAID to issue partial loan guarantees of up to 50 percent for any development purpose that falls under part one of the Foreign Assistance Act of 1961. The DCA has many guiding principles and statutory provisions that assist in governing its usefulness and accuracy. Additionally, loan guarantees can also be implemented by the individual Mission to ensure no default occurs. The process and procedures for these activities can be extensive; however, the process has been included in this chapter as a useful reference.

18. Summary Data from the Phoenix system is available to USAID end users to access standard reports and create custom reports for unit use. Business Objects Enterprise utilizes Phoenix data and offers standard USAID reports accessible through the intranet. Many examples are provided in this chapter to will help with utilizing the reports and processing the needed data.

19. Summary Some missions provide separation pay to Foreign Service National employees when they leave employment. A trust fund is set up and updated annually to provide for these payments. The current year allocation is calculated by determining how much would be paid if all employees left and subtracting existing fund balances from that number Funds that accumulated prior to the implementation of Phoenix are carried over but are not located under the same designation as post-Phoenix funds. When a qualifying employee leaves, it is important to draw first from the pre-Phoenix fund account if one exists. The allocation for the current year is not available for disbursement.

20. Summary Employees in each mission may be U.S. Direct hire, USPSC, or Foreign Service National. Time and attendance data is collected for each employee. After collection and verification, the time and attendance data is submitted to a processing center depending on the type of employee. Important steps in processing payroll include authorizations, documentation, and coding to assure that services are charged to the proper accounting element.

21. Summary Embassy Cashier charges may arise when small value payments are required or when payments or collections are made on behalf of a mission based on authorizing documents such as travel authorizations or purchase orders. Lack of correct Bureau coding may prevent timely processing by the USDO and may result in costly delays. Charges may be posted against USAID/W that should be recorded by the responsible mission. It is important to understand how to avoid such problems as well as how to correct them should they occur.

22. Several situations may cause one mission to disburse or collect funds that are partially or fully related to another mission. A mission may be a service center for a smaller mission that has not fully implemented the Phoenix system, a program or expense may be split funded between missions, and occasionally, one-time charges such as travel expenses in a foreign currency may be paid in one mission on behalf of another. Summary Direct Posting in Phoenix of these charges is preferred over IPAC payments in most cases. It is especially important to follow prescribed procedures for these transactions so that duplicate or unauthorized disbursements do not occur.

23. Summary The GWA/IPAC system is utilized by many government agencies to transfer payments or collections with Trading Partners. USAID/W must be contacted for setup in the system. It is important to download GWA/IPAC reports weekly and post the resulting transactions in the Phoenix system.

24. Collections generally represent returns of money advanced against an obligation. They may be reimbursable or non-reimbursable . Collections may come in through the Embassy or Mission Cashier. Collections may be applied to existing billing documents if they exist but may also be posted without billing documents. Each of these variations requires specific posting processes in Phoenix to return the funds to the proper obligation. Summary Billing documents may be created in Phoenix and may carry interest and penalty although these must currently be calculated manually by the mission. If accounts become uncollectible they may be referred to Washington or written off locally. Write-offs over $5000 must be referred to Washington.

25. Summary The reorganization notebook provides a way to modify or correct posting in the spending chain and automatically move all journal and budgetary amounts to the reorganized posting. It is important to remember that a Document Level Reorganization allows an agency to change the posting of the entire spending chain from the modified document level downward. The reorganization notebook is created in Phoenix and then the reorganization code is e-mailed to Washington for batch processing.

26. A suspense appropriation is an account used on a temporary basis to charge or set aside funds, until they are finally allocated to their appropriate accounts, or charged/credited to another mission/agency. Suspense appropriations should be quickly cleared out and should equal zero by the end of the year since they are a pass-through type account. Summary Various suspense appropriations with their procedures and processes have been covered throughout this chapter. Budget queries or Budget Spending Reports in Phoenix are helpful in detailing the entries to the suspense account so that they may be identified and properly posted.

27. Summary Cash reconciliation is one of the most important internal control points in an organization. Problems in reconciliation potentially indicate incomplete or inaccurate posting of financial data and leads to inaccurate financial reporting. This chapter covers a variety of reconciliations that are performed periodically, including, but not limited to: 1221 USDO, Financial Statement, and monthly reconciliations It is important to ensure that all reconciliations are correct and are performed in a timely manner.

28. Summary Phoenix includes a great number of tables including those for Vendors, Exchange Rates, Post Code/Disbursing Office, and Accounting Template Quick Reference. While everyone with Access to Phoenix may view these tables, only a few authorized users may update them. Great care must be taken when entering data into the tables to ensure accuracy and consistency. There are support services available at designated Missions for each area within USAID.

29. Summary Internal Controls exist within an organization to assure the effectiveness and efficiency of operations, and the reliability of financial reporting, to safeguard assets and to comply with laws and regulations that require those controls. Various components within the organization assist in creating a strong internal control environment. These components include the control environment, risk assessment, control activities, information and communication, and monitoring. Various acts including FMFIA, OMB A-123, and GMRA affect the way an organization implements and utilizes internal controls.

30. Summary It is important to understand how the general ledger reflects the status of budgetary and non-budgetary accounts as well as the stages of the budget life cycle.  The Phoenix General Ledger queries have many practical uses in locating and correcting errors and verifying mission related amounts and transactions.