The antideficiency act: Antideficiency Act 101: a tidy summary of the act's history and its process and types-and a brief discussion of how to avoid violations.
The Antideficiency Act (ADA Ada, city, United States
Ada (ā`ə), city (1990 pop. 15,820), seat of Pontotoc co., S central Okla.; inc. 1904. It is a large cattle market and the center of a rich oil and ranch area. ) is a series of statutes designed to prevent government officials from spending beyond their means by prohibiting the obligation or expenditure of funds beyond those provided. Specifically, government officials are prohibited from authorizing or making an expenditure in excess of an appropriation or a fund (Title 31, United States Code Noun 1. United States Code - a consolidation and codification by subject matter of the general and permanent laws of the United States; is prepared and published by a unit of the United States House of Representatives
U. S. (U.S.C.), section 1341(a)(1)(A)) or an apportionment The process by which legislative seats are distributed among units entitled to representation; determination of the number of representatives that a state, county, or other subdivision may send to a legislative body. The U.S. or an allocation (31 U.S.C. 1517(a)). Likewise, government officials are prohibited from involving the government in a contract or an obligation for the payment of money before an appropriation is made, unless otherwise authorized au·thor·ize
tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es
1. To grant authority or power to.
2. To give permission for; sanction: by law (31 U.S.C. 1341(a)(1)(B)). Also prohibited is the acceptance of voluntary services without statutory authorization, except in emergencies involving human life and property (31 U.S.C. 1342).
Evolution of the Antideficiency Act
The ADA has a long history. Among the powers of the Congress stipulated in the Constitution is the so-called "power of the purse The power of the purse is the ability of one group to manipulate and control the actions of another group by withholding funding, or putting stipulations on the use of funds. The power of the purse can be used positively (e.g. ," which grants to the Congress the sole authority to authorize To empower another with the legal right to perform an action.
The Constitution authorizes Congress to regulate interstate commerce.
authorize v. to officially empower someone to act. (See: authority) the expenditure of money from the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Treasury. Many believe this to be the Congress's greatest check on the power of the Executive Branch.
Executive Branch agencies, through post-Civil War years, had a long history of incurring obligations well in excess of appropriations granted by the Congress, sometimes spending their entire appropriation within a matter of months and then returning to the Congress additional funding. Such behavior was unacceptable to the Congress; which responded in 1870 by passing a statute that simply stated: "[I]t shall not be lawful Licit; legally warranted or authorized.
The terms lawful and legal differ in that the former contemplates the substance of law, whereas the latter alludes to the form of law. A lawful act is authorized, sanctioned, or not forbidden by law. for any department of the government to expend ex·pend
tr.v. ex·pend·ed, ex·pend·ing, ex·pends
1. To lay out; spend: expending tax revenues on government operations. See Synonyms at spend.
2. in any one fiscal year any sum in excess of appropriations made by Congress for that fiscal year, or to involve the government for the future payment of money in excess of such appropriations" (16 Stat. 251 ). This statute has evolved into what we now refer to as the ADA
Violations of the ADA can result in administrative sanctions Sanctions is the plural of sanction. Depending on context, a sanction can be either a punishment or a permission. The word is a contronym.
Sanctions involving countries:
2. This species of punishment is used by legislative bodies to punish their members or others who have been guilty of some impropriety of conduct towards them. up to and including removal from federal employment. If it is shown that the violation was knowing and willful Intentional; not accidental; voluntary; designed.
There is no precise definition of the term willful because its meaning largely depends on the context in which it appears. , criminal sanctions may be imposed in the form of imprisonment Imprisonment
See also Isolation.
former federal maximum security penitentiary, near San Francisco; “escapeproof.” [Am. Hist.: Flexner, 218]
German prison ship in World War II. [Br. Hist. of up to two years and fines of up to $5,000. To date, no person has been convicted of violating the ADA.
In addition to administrative and possible criminal penalties, the ADA contains reporting requirements. Violations of the ADA are reported, via the Department of Defense (DoD), to the President and to the leaders of both Houses of the Congress, as well as to the Government Accountability Office The Government Accountability Office (GAO) is the audit, evaluation, and investigative arm of the United States Congress, and thus an agency in the Legislative Branch of the United States Government. (GAO). The GAO publishes on its Web site a database of ADA violations, which includes a copy of the underlying agency report.
The ADA Process
Potential ADA violations are discovered through a variety of sources. Audits by agencies-such as the Office of the Inspector General Office of the Inspector General (or OIG) is a common sub-agency within cabinet-level agencies of the United States federal government and serves as auditing and investigative arm of the agency's programs focused on identifying waste, fraud and abuse. , DoD, a military department's audit service, or the GAO--may uncover facts that would indicate a possible ADA violation. Questions asked of a DoD component's senior financial manager (often after the fact) may lead to the conclusion that a potential violation has occurred. Finally, individuals familiar with the facts of a particular transaction may conclude on their own that a potential problem exists and call that problem to the attention of senior leadership.
If an activity believes a potential ADA violation has occurred, it will submit an initial report to the DoD component's senior financial manager. This initial report is informal and merely sets forth the factual circumstances that led to the belief that an ADA violation may have occurred. If the receiving senior financial manager determines that a further factual inquiry is warranted, he or she will ask the activity to perform a preliminary ADA review in accordance with the procedures set forth in the DoD Financial Management Regulation (DoDFMR), volume 14, chapter 3. The preliminary report resulting from this review is submitted to the requesting senior financial manager, who, in consultation with counsel, determines whether a formal investigation is required.
Where a formal investigation is warranted, the component's senior financial manager formally assigns an ADA investigator who has been trained in conducting ADA investigations and who typically is from outside the activity being investigated. The investigator's role is to gather facts and determine whether a violation occurred, in accordance with procedures set forth in volume 14 of the DoDFMR. During the time of the investigation, the investigator reports progress on a regular basis. Typically, it is expected that the investigator will conclude his or her investigation within 90 days.
The formal investigation is intended to provide the investigator with the necessary facts in order to write the formal report. Using the preliminary report as a starting point Noun 1. starting point - earliest limiting point
terminus a quo
commencement, get-go, offset, outset, showtime, starting time, beginning, start, kickoff, first - the time at which something is supposed to begin; "they got an early start"; "she knew from the , the investigator will determine what information is missing or what areas require a more in-depth examination in order to accomplish that task. The investigator will interview those involved in the transaction and carefully review the documentary evidence A type of written proof that is offered at a trial to establish the existence or nonexistence of a fact that is in dispute.
Letters, contracts, deeds, licenses, certificates, tickets, or other writings are documentary evidence. in order to trace and document the transactions, decisions, and circumstances that may have led to the violation. During this time, careful coordination with the component's senior financial manager's office, as well as with counsel, will help the investigator to maintain focus and not to be drawn into unproductive lines of inquiry.
As part of this process, in those cases where the investigator concludes that a violation of the ADA has occurred, the individual or individuals named as being responsible for the violation are given the opportunity to review the report and submit a written statement, which is included in the formal report.
The formal report is submitted to the component's senior financial manager. At this point, the component's counsel coordinates with the DoD Deputy General Counsel (Fiscal) (DGC DGC Directors Guild of Canada
DGC Distributed Garbage Collector
DGC Dystrophin-associated Glycoprotein Complex
DGC Data General Corporation
DGC Dakota Gasification Company
DGC Dirección General de Caminos (Guatemala) (F)) for a final determination on whether a violation occurred. If the DGC(F) agrees, the report is returned to the component to exercise appropriate discipline, after which the final report is submitted to the Under Secretary of Defense (Comptroller), who then submits the final report to the President, the Director or the Office of Management and Budget The Office of Management and Budget (OMB), formerly the Bureau of the Budget, is an agency of the federal government that evaluates, formulates, and coordinates management procedures and program objectives within and among departments and agencies of the Executive Branch. , the President of the Senate, the Speaker of the House of Representatives, and the Comptroller General Noun 1. Comptroller General - a United States federal official who supervises expenditures and settles claims against the government
functionary, official - a worker who holds or is invested with an office (GAO).
If, at any time during this process, it appears that a criminal violation may have occurred, the investigation is stopped and the matter is referred to the appropriate component's criminal investigative service (CIS Cis (sĭs), same as Kish (1.)
(1) (CompuServe Information Service) See CompuServe.
(2) (Card Information S ). While rare, such referrals do occur. It then is up to the CIS to determine whether, in its opinion, the facts warrant referring the case to the Department of Justice (or the appropriate United States attorney United States Attorneys (also known as federal prosecutors) represent the United States federal government in United States district court and United States court of appeals. There are 93 U.S. ) for possible prosecution.
The DoDFMR requires that the person or persons who are named as being responsible for the violation be administratively disciplined. This discipline is administered on a case-by-case basis, taking into account the nature and seriousness of the offense and the record and experience and the degree and level of responsibility of the person or persons responsible. For civilian employees, administrative discipline may range from a written reprimand or admonishment to removal from office; military personnel may be subject to appropriate administrative discipline or to action under the Uniform Code of Military Justice The Uniform Code of Military Justice (UCMJ) was enacted by Congress in 1950 (10 U.S.C.A. § 801 et seq.) to establish a standard set of procedural and substantive criminal laws for all the U.S. military services. (It went into effect the following year. .
Types of ADA Violations
The Congress maintains its power of the purse, in part, by placing limitations on how the Executive Branch can spend money. These limitations fall into three categories: limitations on the purpose for which appropriated funds may be spent; limitations on the time such funds are available for obligation; and limitations on the amount available to be obligated ob·li·gate
tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates
1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force.
2. To cause to be grateful or indebted; oblige. . Not surprisingly, ADA violations may fall into any of these three categories.
Purpose violations perhaps are the most common type of violation. 31 U.S.C. 1301(a), commonly known as the Purpose Statute, states: "Appropriations shall be applied only to the objects for which the appropriations were made except as otherwise provided by law." The obligation of funds for a purpose other than that for which the funds were appropriated is a violation of the Purpose Statute. In addition, a violation of the ADA (specifically, section 1341) may result because the official may have incurred an obligation in an amount that exceeds the amount available.
In this case, it is important to distinguish between two types of purpose violations. As an example, suppose an activity places a number of purchase orders for certain ADP (1) (Automatic Data Processing) Synonymous with data processing (DP), electronic data processing (EDP) and information processing.
(2) (Automatic Data Processing, Inc., Roseland, NJ, www.adp. equipment, each of which would properly be paid for with operating funds. However, having obtained all of the equipment under each of these purchase orders, the agency then ties the equipment together into a local area network (LAN (Local Area Network) A communications network that serves users within a confined geographical area. The "clients" are the user's workstations typically running Windows, although Mac and Linux clients are also used. ), the creation of which is required to be funded using a procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. appropriation. The activity thereby has violated the Purpose Statute, because it has used its operating funds for an unauthorized purpose.
The activity also may have committed a second violation of the ADA. On its face, section 1341 is violated because it exceeds the amount available in the operation and maintenance account--zero--for the procurement of a LAN. That activity, however, would be permitted to adjust its books, if possible, to charge the correct procurement appropriation for the expenditure. To make that adjustment, the activity must show that the correct funds were available at the time of the improper obligation, at the time the correction was made, and at all times in between. The theory is that there never can be a time at which the correct account would be driven to a negative balance had the charge been made properly. An ADA violation occurs only if an expenditure was improperly charged and the correct appropriation does not have a sufficient balance, or is otherwise unavailable, to make the adjustment.
The second kind of purpose violation occurs when an activity incurs an obligation for a purpose where there is no proper funding source. For example, if an activity decides it would be a nice gesture to buy its employees driving moccasins and matching caps and key chains so that employees would have warm thoughts of the agency as they drove to work each morning, then an unavoidable violation of the ADA would occur because there is no money available to any DoD activity to buy such gifts for its employees.
Time violations are the next type of ADA violations. On its face, a time violation would seem easy to identify. With a few exceptions, funds appropriated by the Congress are available for obligation for a fixed period of time, and any attempt to obligate obligate /ob·li·gate/ (ob´li-gat) pertaining to or characterized by the ability to survive only in a particular environment or to assume only a particular role, as an obligate anaerobe. these funds either before or after they are available for obligation results in a violation of the ADA.
There are, however, other kinds of time violations. Suppose that an activity enters into a three-year contract for the provision of certain goods or services, properly funded with one-year operation and maintenance funds. Absent specific multiyear contracting authority, such a contract would result in a violation of the ADA because operation and maintenance funds for the second and third years of the contract have not yet been appropriated.
Another illustration is the practice (declining, one would hope) of "banking" money via interagency in·ter·a·gen·cy
Involving or representing two or more agencies, especially government agencies. agreements, the Economy Act, or other mechanisms, under which the receiving agency agrees to hold funds for the activity for use sometime in the future when the obligating activity can further "define" its needs. The character of an activity's money does not change simply by sending it to another agency for execution, and such mechanisms cannot be used to extend the life of an appropriation.
Amount violations are the third type of ADA violations. Again, many of these are intuitively obvious. An activity cannot spend more money than has been provided to it in an allocation or an apportionment. So, for example, an activity cannot agree to an open-ended indemnification Indemnification
Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from agreement because, generally, activities do not have available to them unlimited funds to make good on such indemnification agreements, should that be necessary.
Some amount violations may be less obvious and thus require care on the part of funds holders. An example cited in the DoDFMR is that of a funds holder who erroneously er·ro·ne·ous
Containing or derived from error; mistaken: erroneous conclusions.
[Middle English, from Latin err distributes more funds than are available to that funds holder. If the receiving activities incur obligations and expenditures in excess of the amount available to the funds holder, then the funds holder has violated the ADA because he or she was responsible for exceeding the total fund availability
Avoid ADA Violation
Our goal, of course, is to comply with the statutory restrictions within which we work, and not to violate the ADA. How do we do that?
First, become knowledgeable on what is prohibited by the ADA, as well as common scenarios leading to ADA violations, so that these situations may be avoided There are a number of educational resources available through which one can become knowledgeable about the ADA and fiscal law in general, some of which are listed in the sidebar (1) A Windows Vista desktop panel that holds mini applications (gadgets) such as a calendar, calculator, stock ticker and Vonage phone dialer. It is the Windows counterpart to the Dashboard in the Mac. See Windows Vista and gadget. on page 17.
Second, avoid those actions that the individual knows likely will lead to a violation of the ADA. In reviewing formal reports, it is surprising how often persons named as responsible parties will acknowledge that they believed their actions not to be appropriate, but they took those actions anyway for any variety of reasons. Whether because of command pressure, the desire to "get the job done," or whatever else, individuals should avoid taking those actions that they know to be improper.
Third, ask for help if necessary. If an individual is uncertain whether a particular action will result in an ADA violation or needs to know how to structure a transaction in order to avoid a violation, he or she should seek help from his or her supporting comptroller or legal counsel.
Fourth, take action to deal with the situation as soon as possible if a potential violation is discovered. If dealt with early enough, it is possible in many cases to take corrective action A corrective action is a change implemented to address a weakness identified in a management system. Normally corrective actions are instigated in response to a customer complaint, abnormal levels if internal nonconformity, nonconformities identified during an internal audit or and eliminate the potential violation.
Finally, cooperate with the investigator if there is a violation that results in a formal investigation. Part of the purpose of the formal investigation is to establish what action needs to be taken to mitigate or correct the violation, and the investigator will need all the help the individual can give to work through the issue so that corrective action can be taken.
(Editor's note Editor's Note (foaled in 1993 in Kentucky) is an American thoroughbred Stallion racehorse. He was sired by 1992 U.S. Champion 2 YO Colt Forty Niner, who in turn was a son of Champion sire Mr. Prospector and out of the mare, Beware Of The Cat.
Trained by D. : Recently, a Lean Six Sigma Lean Six Sigma is a business improvement methodology which combines (as the name implies) tools from both Lean Manufacturing and Six Sigma. Lean manufacturing focuses on speed and traditional Six Sigma focuses on quality. By combining the two, the result is better quality faster. project resulted in a streamlined process for handling ADAs within the DoD, providing a consistent process throughout the DoD components. See the Winter 2006 issue of Armed Forces Comptroller for a discussion of the process changes.)
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I certify cer·ti·fy
v. cer·ti·fied, cer·ti·fy·ing, cer·ti·fies
a. To confirm formally as true, accurate, or genuine.
b. that all information furnished fur·nish
tr.v. fur·nished, fur·nish·ing, fur·nish·es
1. To equip with what is needed, especially to provide furniture for.
2. on this form is true and complete I understand that anyone who furnishes false or misleading information on this form or who omits material or information requested on the form may be subject to criminal sanctions (including fines and imprisonment) and/or civil sanctions (including civil penalties).
Avoiding Antideficiency Act Violations
* Become knowledgeable about what is prohibited.
* Avoid actions known to be likely causes of ADAs.
* Ask for help.
* If a violation is discovered, act quickly and attempt corrective action.
* If an investigation occurs, cooperate with the investigator.
Sources of Additional Antideficiency Act Information
Army fiscal law and ADA information: http://www.jagcnet.army.mil/fiscallaw http://www.asafm.army.mil/fo/fod/ada/ada.asp
Navy information (limited access): https://fmbweb1.nmci.navy.mil An Internet address domain name for a military agency. See Internet address.
(networking) mil - The top-level domain for entities affiliated with US armed forces. (Click on Policy, then on Antideficiency Act information.)
Air Force online primer prim·er
A segment of DNA or RNA that is complementary to a given DNA sequence and that is needed to initiate replication by DNA polymerase. on fiscal law: https://www.saffm.hq.af.mil/fiscallaw/index.htm
Under Secand thus require care on the part of funds
Sources of Additional Antideficiency Act Information
Army fiscal law and ADA information: http://www.jagcnet.army.mil/fiscallaw http://www.asafm.army.mil/fo/fod/ada/ada.asp
Navy information (limited access): https://fmbweb1.nmci.navy.mil (Click on Policy, then on Antideficiency Act information.)
Air Force online primer on fiscal law: https://www.saffm.hq.af.mil/fiscallaw/index.htm
Under Secretary of Defense (Comptroller) memo on ADAs posted on the ASMC ASMC American Suzuki Motor Corporation
ASMC American Society of Military Comptrollers
ASMC Association of Sales & Marketing Companies
ASMC Advanced Semiconductor Manufacturing Conference
ASMC Area Support Medical Company
ASMC American Small Manufacturers Coalition Web site: http://www.asmconline.org/files/attachc.pdf
Government Accountability Office provides ADA statistics: www.gao.gov (Go to Legal Products and click on Antideficiency Act violations.)
* This information was made available to participants in an ADA audio conference, July 18, 2006.