TFM

Budgeting

Budgeting

The Budget and Accounting Act of 1921 is the legislation that established the framework for the modern federal budget.

Each year, Congress works on a federal budget for the next fiscal year. The government’s fiscal year runs from October 1 of one year to September 30 of the next. The budget includes a detailed spending plan.

The Constitution puts Congress in charge of the budget, granting it the power to collect taxes, borrow money, and approve spending.

The Office of Management and Budget (OMB) is the policy-setting entity involved with the federal budget process. Federal Entities work with OMB throughout the federal budget development and execution.

Once Congress passes a budget, Treasury ensures that federal entities can spend the funding they have been allocated.

“The Federal Government is the people and the budget is the reflection of their need.” -John F. Kennedy

The Federal Budget Development Lifecycle

The budget process occurs in three main phases:

During this phase, the Executive Branch prepares the President's Budget. OMB and the Federal agencies begin preparing the next budget almost as soon as the President has sent the last one to the Congress. OMB officially starts the process by sending planning guidance to Executive Branch agencies in the spring. The President completes this phase by sending the budget to the Congress on the first Monday in February, as specified in law, although occasionally Presidents have sent it later for various reasons. For example, in a year with a transition between outgoing and incoming Administrations, the timing of the President's Budget transmittal changes.

This phase starts in late January or February, when the Congress receives the President's Budget. The Congress does not vote on the President's Budget itself, and it does not enact a budget of its own, as such. It considers the President's Budget proposals, passes an overall revenue and spending plan called a "budget resolution," and enacts the regular appropriations acts and other laws that control spending and receipts.

To see the approved federal budget for a year, you may look at the appropriations bills for that year that were signed into law. The approved appropriation bills can be found on the Appropriations and Budget page on Congress.gov.

This phase lasts for at least five fiscal years and includes two parts. The two parts include mission accomplishment which is when the funding is spent, and reporting where the federal entities report out how they spent their budget.

  1. Formulation
  2. Congressional
  3. Execution

For a more detailed federal budget process, please visit USA.gov’s Budget of the U.S. Government.

How does the government get the money? Where does it go?

Most government money comes from:

  • Collecting taxes, or revenue, from people and businesses
  • Borrowing it by selling Treasury securities (savings bonds, notes, and Treasury bills)

The government spends money on:

  • Social Security, Medicare, and other mandatory spending required by law
  • Interest on the debt--the total the government owes on all past borrowing
  • Discretionary spending, the amount Congress sets annually for all other programs and agencies.

Office of Management and Budget

The Office of Management and Budget oversees the performance of federal agencies and administers the federal budget.

Since federal entities work with OMB for their budget proposals, OMB provides information and guidance for agencies to follow when developing their budget. Some of the most important OMB guidance as it relates to budgeting is below. For all OMB information and guidance visit the OMB website.

OMB Circular No. A-11

OMB Circular No. A-11 provides guidance to agencies on preparing the annual Budget and instructions for budget execution.

OMB Circular No. A-25

OMB Circular No. A-25 establishes Federal policy regarding fees assessed for Government services and for sale or use of Government goods or resources. It provides information on the scope and types of activities subject to user charges and on the basis upon which user charges are to be set. Finally, it provides guidance for agency implementation of charges and the disposition of collections.

OMB Circular No. A-76

OMB Circular No. A-76 establishes federal policy for the competition of commercial activities.

Department of Treasury (Treasury), Bureau of Fiscal Service (Fiscal Service)

Fiscal Service works with OMB to establish new Treasury Account Symbols (TAS) both during the budget preparation process and after the appropriation bills become law. Once the laws have been passed OMB issues the apportionments. Fiscal service then issues a warrant which authorizes the federal entity to withdraw funding from the Treasury General Fund (TGA).

Fiscal Service also assists federal entities in setting up agency location codes (ALC) and getting them access to the Central Accounting Reporting System (CARS) and Governmentwide Treasury Account Symbol Adjusted Trial Balance System (GTAS) ensure that the agencies can meet their financial reporting requirements.

Note: The budgeting section of the TFX will be built out in the future. Some of the Treasury guidance related to Budgeting is below until this happens.

TFM Volume 1, Part 1, Chapter 2000 Financial Operations Startup Procedures for New Federal Entities

TFM Volume 1, Part 1, Chapter 2000 addresses startup procedures for new federal entities with regard to fiscal accounting and reporting, and certain financial operations.

TFM Volume 1, Part 2, Chapter 1500 Description of Accounts Relating to Financial Operations

TFM Volume 1, Part 2, Chapter 1500 prescribes accounts relating to the government's financial operations. The Department of the Treasury (Treasury), Bureau of the Fiscal Service (Fiscal Service), and the Office of Management and Budget (OMB) assign the accounts to agencies.

TFM Volume I, Chapter 2000 Warrant and Nonexpenditure Transfer (NET) Transactions

TFM Volume 1, Part 2, Chapter 2000 describes the procedures and forms used to record warrant transactions, and contains information about using the Central Accounting Reporting System (CARS) to process Nonexpenditure Transfers (NETs) transactions and to retrieve processed warrant transactions.

United States Standard General Ledger (USSGL)

The USSGL Guidance website offers help for federal accountants, including USSGL implementation guidance, USSGL meeting materials, and other important guidance.

The TFM USSGL Supplement provides a uniform chart of accounts & technical guidance for standardizing federal agency accounting.

Federal Account Symbols and Titles (The FAST Book)

The FAST Book lists receipt, appropriation, and other fund account symbols and titles assigned by the Department of the Treasury.

Federal Financial Management Standard Functions and Activities

Federal Business Lifecycles, functional areas, functions, and activities serve as the basis for a common understanding of what services agencies need and solutions that should be offered.

The Functions and activities that relate to budgeting are:

Budget Setup and Maintenance

Fund Allocation and Control

Budgetary Reporting

Federal Financial Management System Requirements (FFMSRs)

The Federal Financial Management Improvement Act of 1996 (FFMIA) required the establishment of uniform financial systems, standards, and reporting. Agencies should use the Federal Financial Management System Requirements in the pre-acquisition, acquisition, and implementation of new financial management solutions. These requirements can be found in TFM Volume I, Part 6, Chapter 9500.

The FFMSRs that relate to budgeting are:

1.1.1 Defining GL Accounts and Attributes

1.1.2 Posting GL Transactions

1.4.1 Posting GL Transactions

2.1.1 Recording Budget Authority

2.1.2 Recording Budget Obligations and Outlays

2.1.3 Reporting Budgetary Resources and Budget Execution

Federal Financial Management Standard Business Use Cases

Business Use Cases are a set of agency “stories” that document the key activities, inputs, outputs, and other LOB intersections to describe how the Federal government operates.

All of the business use cases relate to budgeting:

Budget Formulation to Execution
Acquire to Dispose
Request to Procure
Procure to Pay
Bill to Collect
Agree to Reimburse
Apply to Preform
Hire to Retire
Book to Reimburse
Apply to Repay
Federal Financial Management Standard Data Elements
Standard Data Elements identify the minimum data fields required to support the inputs and outputs noted in the use cases and capabilities.
Other Resources
GAO Policy and Procedures Manual for Guidance of Federal Agencies- Title 2
GAO Policy and Procedures Manual for Guidance of Federal Agencies- Title 7
Consolidated Appropriations Act
The Government Performance and Results Act (GPRA)
GPRA Modernization Act of 2010
Treasury Order 100-14 Designation of the Assistant Secretary for Financial Institutions to Serve on the Community Development Advisory Board
Treasury Order 102-06 Administering the Expenses for Unforeseen Emergencies of a Confidential Nature
Treasury Order 102-13 Delegation of Authority Concerning Budget Matters
Budget and Accounting Act of 1921
Congressional Budget and Impoundment Control Act of 1974
Balanced Budget and Emergency Deficit Control Act of 1985, as amended (BBEDCA)
Statutory Pay-As-You-Go Act of 2010
Antideficiency Act
Federal Credit Reform Act of 1990

Issuing Payments

Issuing Payments

In FY2019, the Bureau of the Fiscal Service disbursed 1.2 billion payments totaling more than $3.7 trillion, 100% on time, with 96.5% disbursed electronically. In order to make sure that all disbursements are legal, proper and accurately recorded in an efficient manner, payees must follow guidelines provided by the Bureau of the Fiscal Service and other supporting government entities.

Payee Setup and Maintenance

Federal entities are responsible for establishing and maintaining federal and non-federal payee information including the validation of payee information against other payee information sources (e.g. SAM, Do Not Pay).Federal entities should uniformly follow Treasury Financial Manual (TFM) rules in connection with the designation of a payee or payees of government payments.

Payment Obligations

When establishing a new federal entity relationship with Fiscal Service there needs to be a new obligation management relationship established. Obligations represent orders placed, contracts awarded, services received, and similar transactions during an accounting period that will require payment during the same, or a future, period.

Payment Mechanisms

Fiscal Service provides multiple services and guidance on the different payment methods federal entities can utilize to schedule and carry out payments. Some examples include Stored Value Cards (SVCs), Government Purchase Cards, and Treasury Checks.

Scheduling Payments

The Treasury Financial Manual (TFM) provides guidance to federal entities on the overall disbursing rules. The principal objectives of control of disbursements are to ensure that all disbursements are legal, proper, and correct and that all disbursements are accurately recorded, reported, and reconciled in a timely, efficient manner. Each federal entity’s system of internal management control of, and related procedures for, disbursements should be based on the operating needs of that particular federal entity and should conform to the Department of the Treasury’s (Treasury) regulations and the related principles and standards for internal management control prescribed by the Federal Accounting Standards Advisory Board (FASAB).

Payment Issue Resolution

Issue Resolution includes information on policies, procedures, and reports regarding the resolution of various payment issues. These may include payments which were identified as not received, lost, or stolen, undeliverable, returned, or subject to reclamations.

Reporting Payments

All federal entities, either using Treasury disbursing office (TDO) services, or operating as a Non-Treasury Disbursing Office (NTDO) have payment reporting requirements to support disbursement and financial reconciliation activities.

Payment Reporting

Payment Reporting

The Financial Report of the United States Government provides the President, Congress, and the American people with a comprehensive view of the federal government's finances, i.e., its financial position and condition, revenues and costs, assets and liabilities, and other obligations and commitments. The Financial Report also discusses important financial issues and significant conditions that may affect future operations, including the need to achieve fiscal sustainability over the medium and long term.

Treasury Reporting

Treasury Reporting prepares statements of accountability, foreign currency reports and verifies required financial reports can be traced to general ledger account balances. The Daily Treasury Statement and Monthly Treasury Statement are two important aspects. The Daily Treasury Statement summarizes the US Treasury’s cash and debt operations for the Federal Government on a modified cash basis. Deposits are reported as received and withdrawals are reported as processed. The Monthly Treasury Statement summarizes the financial activities of the federal government and off-budget federal entities and conforms to the Budget of the U.S. Government.

Financial Statement Preparation

Financial Statement Preparation prepares financial statements and footnotes required by OMB Circular A-136. The Government Accountability Office (GAO) is required to audit these statements. In addition, Financial Statement Preparation verifies financial statements and other required reports to be traced to the general ledger account balances. These records must be consolidated to record eliminations.

Cash Forecasting and Reporting

Two of Treasury’s primary responsibilities are forecasting and monitoring the federal government’s overall cash requirements. Treasury maintains a forecast of agencies’ daily cash requirements for up to 12 months in advance. Treasury uses these forecasts to determine the amount and timing of federal government borrowing and investments of excess cash balances.

Performance and Operational Reporting

Performance and Operational Reporting provides general ledger information for agency-specific reports, verify required financial reports to be traced to general ledger account balances, and includes providing financial performance and operational information to agency program offices.

Federal Reserve Bank Reporting

Fiscal Service provides guidance for Federal Reserve Banks (FRBs) operating procedures and reporting. This includes conditions governing payment of Public Debt redemptions, Letter-Of-Credit, handling of U.S. Postal Money Orders, and pledging of collateral. These conditions protect the Federal government against the risk of loss.