CDFM Fiscal Law Principles 2 — Questions and Answers
Question 1: Under the Antideficiency Act, which action is PROHIBITED when an appropriation is exhausted?
- Continuing to obligate funds beyond the appropriated amount (Correct answer)
- Reprogramming funds from a different program element
- Requesting a supplemental appropriation from Congress
- Placing a moratorium on new contracts
Correct answer: Continuing to obligate funds beyond the appropriated amount
The Antideficiency Act (31 U.S.C. § 1341) prohibits incurring obligations or expenditures in excess of amounts available in an appropriation.
Question 2: Which doctrine governs whether a particular expenditure is a proper charge against a specific appropriation?
- Necessary Expense Doctrine (Correct answer)
- Bona Fide Needs Rule
- Time Limitation Rule
- Interagency Transaction Rule
Correct answer: Necessary Expense Doctrine
The Necessary Expense Doctrine (3-part test) determines whether an expenditure is a proper use of a given appropriation by evaluating purpose, time, and amount.
Question 3: A DoD agency uses O&M funds to purchase furniture worth $45,000 for a new administrative office. This likely violates which fiscal law principle?
- The threshold for investment items requiring procurement appropriations (Correct answer)
- The Bona Fide Needs Rule because the need arose in the prior fiscal year
- The Antideficiency Act because O&M is exhausted
- The Purpose Statute because furniture is never an O&M expense
Correct answer: The threshold for investment items requiring procurement appropriations
Items with a unit cost at or above the investment threshold ($250,000 for most DoD items) must be funded with procurement appropriations, not O&M.
Question 4: What is the primary legal authority that prohibits federal agencies from spending money for purposes not authorized by Congress?
- 31 U.S.C. § 1301 (Purpose Statute) (Correct answer)
- 31 U.S.C. § 1341 (Antideficiency Act)
- 31 U.S.C. § 1502 (Bona Fide Needs Rule)
- 10 U.S.C. § 2784 (Government Travel Charge Card)
Correct answer: 31 U.S.C. § 1301 (Purpose Statute)
31 U.S.C. § 1301 states that appropriations shall be applied only to the objects for which they were made.
Question 5: A contracting officer signs a contract in September of FY2026 for services to be delivered entirely in FY2027. Which rule is most likely violated?
- Bona Fide Needs Rule, because the need does not exist in the current fiscal year (Correct answer)
- Antideficiency Act, because funds are being pre-committed
- Purpose Statute, because O&M cannot fund future services
- Economy Act, because an interagency agreement is required
Correct answer: Bona Fide Needs Rule, because the need does not exist in the current fiscal year
The Bona Fide Needs Rule (31 U.S.C. § 1502) requires that an appropriation only be used for the genuine needs of the fiscal year for which it was appropriated.
Question 6: Which of the following correctly describes a 'no-year' appropriation?
- Funds remain available for obligation without any fiscal year expiration (Correct answer)
- Funds expire at the end of the fiscal year for obligation purposes
- Funds are available for two fiscal years before expiration
- Funds can only be used for military construction projects
Correct answer: Funds remain available for obligation without any fiscal year expiration
No-year appropriations (marked with an 'X' in the appropriation symbol) remain available for obligation until the purpose is accomplished or Congress rescinds the authority.
Question 7: An Antideficiency Act violation must be reported to which entities?
- The President and Congress (Correct answer)
- Only the agency's Inspector General
- Only the Office of Management and Budget
- The Department of Justice and the GAO
Correct answer: The President and Congress
31 U.S.C. § 1351 requires ADA violations to be reported immediately to the President and Congress, and the agency head must also report to OMB.
CDFM Fiscal Law Principles 2
Under the Antideficiency Act, which action is PROHIBITED when an appropriation is exhausted?