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SMG 2310.1

FDA STAFF MANUAL GUIDES, VOLUME III - GENERAL ADMINISTRATION

FINANCIAL MANAGEMENT

BUDGET

ADMINISTRATIVE CONTROL OF FUNDS: ALLOTMENTS, ALLOWANCES, AND SUBALLOWANCES

Effective Date: 09/16/2008

[PDF Version]

 1. Purpose
 2. Definitions
 3. Policy
 4. Responsibilities
 5. Effective Date
 6. History

1. PURPOSE 

The purpose of this policy is to outline when it is appropriate to issue allotments, allowances and suballowances.

2. DEFINITIONS 

A. Allotment - Authority delegated by the head or other authorized employee of an agency to incur obligations within a specified amount, pursuant to the Office of Management and Budget (OMB) apportionment or reapportionment action or other statutory authority making funds available for obligation. Amount allotted cannot exceed the amount apportioned by OMB.

B. Allowance - A classification of obligational authority below the allotment level which is issued to centers/offices to make funds available for reasonable spending.

C. Apportionment - Action by which OMB distributes amounts available for obligation in an appropriation or fund account. An apportionment divides amounts available for obligation by specific time periods (usually quarters), activities, projects, objects, or a combination thereof. The amounts apportioned limit the amount of obligations that may be incurred.

D. Appropriation - An Act of Congress allowing federal agencies to incur obligations and to make payments from Treasury for specified purposes.

E. Budget Authority - Authority provided by law to enter into financial obligations that will result in immediate or future outlays involving federal government funds.

F. Commitment - An administrative reservation of funds in anticipation of their obligation.

G. Continuing Appropriation/Continuing Resolution - Legislation that may be enacted to provide budget authority for federal agencies and/or specific activities to continue in operation when the Congress and the President have not completed action on appropriation at the beginning of the fiscal year. A continuing resolution may be enacted for the full year, up to a specified date, or until regular appropriations are enacted. A continuing resolution usually specifies a maximum rate at which the obligations may be incurred based on levels specified in the resolution.

H. Financial Operating Plan - Estimates of quarterly obligations by major object class to show how funds will be used within allocations.

I. Fund Control System - Part of an agency's internal control system which may include provisions for allotments and other administrative subdivisions of budgetary resources within the limits of apportionments. Fund control systems are fully supported by agency accounting systems. The timeframe covered by an agency's fund control systems corresponds to the agency's financial plans.

J. Obligation - Orders placed, contracts awarded, services received and similar transactions that will require payments during the same or a future period.

K. Suballowance - A classification of obligational authority which may be issued below the allowance level to make funds available for reasonable spending.

3. POLICY 

A. For effective and efficient management of agency funds and to comply with legislative objectives, it is the policy of the Food and Drug Administration that operations be funded at the highest level by means of an allotment issued at the Agency level for each appropriation.

B. Operations will be further funded below the allotment level to monitor how funds are used by means of allowances and suballowances.

Allotments

The Director, Office of Financial Management, FDA, or his/her designee, will issue a single allotment, by quarter, for each appropriation. Form FDA1614, Allotment Notice, will be used for this purpose. Allotments will not exceed the amount of the apportionment or reapportionment applicable to the period covered.

1. Allotments issued at the beginning of the fiscal year prior to the approval of current appropriations will be based upon authority of a continuing resolution.

2. Allotments shall not be exceeded and are subject to the limitations and restrictions set forth on the Allotment Notice.

Allowances

The Director, Office of Financial Management, FDA, or his/her designee, will issue allowances by quarter to the Center Directors, Associate Commissioner for Regulatory Affairs, other Associate Commissioners and Office Directors having primary responsibility for the programs involved. Form FDA1615, Allowance Notice, will be used for this purpose.

a. Allowances issued at the beginning of the fiscal year prior to the approval of current appropriations will be based upon authority of a continuing resolution.

b. Allowances shall not be exceeded and are subject to the limitations and restrictions set forth on the Allowance Notice.

c. Increases to allowances must be requested before allowances are exceeded. Written requests must be submitted to the Division of Budget Execution and Control.

d. The recipient of an Allowance Notice will establish a list of persons by name and title who are authorized to sign obligation and commitment documents. The list should include types of funds authorized and spending limits. This list will be provided to the Director, Division of Accounting, OFM, and copied to the Director, Division of Budget Execution and Control and Team Leader, Customer Relations Team, Office of Acquisition and Grants Services at the beginning of every fiscal year with appropriate revisions provided as necessary throughout the fiscal year.

Suballowances

The Director, Office of Financial Management, FDA, or his/her designee, may, as required, issue suballowances by quarter below the allowance level. Form FDA1615A, Suballowance Notice, will be used for this purpose.

a. Allowees may establish "suballowances" and thereby delegate obligating authority to subordinate officers or others for the purpose of accomplishing specific portions of the program. Suballowances are not official limitations of total obligations to be incurred and increases should be discussed between the allowee and the receiver of a suballowance.

b. Suballowances issued at the beginning of the fiscal year prior to the approval of current appropriations will be based upon authority of a continuing resolution.

4. RESPONSIBILITIES 

The allowee is officially responsible for ensuring that obligations and commitments are within the amount specified in the allowance notice. Allowees may, by published policy, by express statement or by personal agreement, permit minor over-obligation of suballowances, but will be held accountable if the net total of such over-obligation causes an allowance to be exceeded. Any person who exceeds the authority provided in a suballowance to the extent that an allowance is over obligated will be accountable to his allowee for such action.

5. EFFECTIVE DATE 

This policy was signed by John P. Gentile, Associate Commissioner for Operations, effective September 16, 2008.

 6. Document History -- SMG 2310.1, Administrative Control of Funds: Allotments, Allowances, and Suballowances

STATUS (I, R, C)DATE APPROVEDLOCATION OF CHANGE HISTORYCONTACTAPPROVING OFFICIAL
Initial09/16/2008N/aOC/OM/OFMJohn P. Gentile, Associate Commissioner for Operations