Budgeting & Financial Oversight Flashcards
7 cards from real FAC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Budgeting & Financial Oversight flashcards as text
What is the purpose of a 'limitation of funds' clause in a cost-reimbursement contract?
Answer: It caps the government's liability at the funded amount and requires the contractor to notify the government before exceeding 75% of funding
FAR 52.232-22 requires contractors to notify the CO when 75% of the funded amount is consumed, giving the government time to provide additional funding or stop work.
Under federal acquisition policy, what is the purpose of the 'Program Objective Memorandum' (POM)?
Answer: It documents a DoD component's proposed resource requirements aligned to strategic priorities over a multi-year planning period
The POM is the primary document through which DoD components submit their resource requirements for review and incorporation into the Future Years Defense Program (FYDP).
When a contract modification increases scope and cost, which action is required before the modification is signed?
Answer: The contracting officer must verify that sufficient, valid funds are available to cover the increase
Funds availability must be confirmed before any contract action that increases financial obligation, to avoid an Antideficiency Act violation.
What is 'obligation authority' as it relates to federal acquisition?
Answer: The legal power granted by an appropriation to enter into binding commitments on behalf of the government
Obligation authority derives from appropriations enacted by Congress and gives agencies the legal capacity to commit the government to future expenditures.
What financial control is provided by the 'apportionment' process administered by OMB?
Answer: OMB divides appropriated funds into quarterly or other periods to prevent agencies from spending all funds too early in the year
Apportionment by OMB distributes appropriated budget authority over time (usually quarterly), ensuring agencies do not exhaust funds prematurely and risk anti-deficiency violations.
A contracting officer receives a valid invoice but there are insufficient funds remaining on the contract to pay it. What is the most appropriate first action?
Answer: Notify the program manager and finance office immediately to secure additional funding or resolve the shortfall
When funds are insufficient to pay a valid invoice, the CO must engage the program manager and finance office promptly to avoid a late payment penalty and potential ADA violation.
Which concept describes the federal government's practice of recording obligations at the time contracts are awarded rather than when payments are made?
Answer: Obligational accounting (commitment accounting)
Federal budget law uses obligational (commitment-based) accounting where the legal commitment at contract award reduces available budget authority, distinct from when cash actually flows out.