CHAPTER 6 FINANCIAL MANAGEMENT

The financial management procedures include the operating target (OPTAR) accounting, inventory accounting, and cost accounting. You will be required to know this information when you are assigned as a supervisor in a squadron material control, stock control, or aviation support division (ASD)/supply support center (SSC). In squadron material control, you, as the supervisor, are responsible for managing the OPTAR and submitting the required reports. In the stock control or ASD/SSC of a supply department, you will be involved with inventory and cost accounting (directly or indirectly). This chapter will help you understand the requirements, responsibilities, and supervisory checks needed for proper financial management.

ACCOUNTING CLASSIFICATIONS

The list of accounting classifications and their purpose is described in detail in the Defense Finance Accounting Service-Cleveland, (DFAS-CL) Manual, (NAVSO P) 1000.2M. The accounting classifications are as follows:

Appropriation or fund-Expenditures in the Navy are primarily classified by appropriation or fund; that is, according to the legal source of the finds chargeable. This accounting classification is described in chapter 2 of DFAS-CL (NAVSO P) 1000.2M.

Generally, appropriations and funds are apportioned to the Navy and then subdivided to other levels of Navy and Marine Corps organizations. The appropriations and funds are made available at the operating level by means of allotments or in some cases suballotments. These accounting classifications are described in chapter 3 of DFAS-CL (NAVSO P) 1000.2M.

Functional accounts-To prepare functional reports with prescribed details of analysis under the fund level, functional accounts are established for identification of the required details. This type of classification is covered in chapter 4 of DFAS-CL Manual, (NAVSO P) 1000.2M. Some functional accounts need to be identified to the appropriate activity. The unit identification codes (UICs) are assigned to identify the activities. The UICs are listed in chapter 5 of the Navy Comptroller (NAVCOMPT) Manual, Volume 2.

Object class-Under each appropriation, expenditures are also classified by object class; that is, the kind of item being obtained by the expenditure, However, the object class is not actually shown on some documents because it can be obtained from other information appearing on the documents. This type of classification is covered in chapter 6 of DFAS-CL Manual, (NAVSO P) 1000.2M.

APPROPRIATIONS

The funds authorized by Congress for use by different departments of the government are segregated into broad categories as indicated by the appropriation account. These categories are called the appropriations. Appropriations are made from the general fund by Congress to be expended in connection with the operation of the Navy. These appropriations are made for specific purposes and cannot be expended for other than the purpose stipulated. The purpose of segregating by appropriations is to channel the funds to the commands responsible for their administration.

BUDGET ACTIVITY

The appropriations are divided into smaller accounts for various purposes. These divisions are called budget activities and the accounting symbols that identify them are called subheads. Budget activity accounts are established within each appropriation account to record financial transactions. These are the transactions relating to the specific functions contained in the budget as approved by Congress. Budget activity accounts are used primarily for administration, accounting, and control.

BUREAU CONTROL NUMBERS

A bureau control number is an allotment authorization number consisting of five digits. It is made up of a 3-digit allotment number prefixed by a 2-digit budget project number. The bureau control number identifies the activity or ship to which the 3-digit allotment was granted together with the

applicable budget project. This numbering system facilitates the classification of data contained in the accounting register used for posting appropriation accounts of various offices and commands.

Budget Projects

The budget activities are divided into one or more projects according to the budget approved by the Congress. To develop more detailed data essential to the administration and control of appropriation, budget projects may be further divided into subprojects. These subprojects can be summarized directly into the related budget project.

Allotments

All funds available within an appropriation account for commitment obligation and expenditure are administered through the issuance of allotments. An allotment is an authorization granted within and according to an appropriation for the purpose of incurrring commitments, obligations, and expenditures to accomplish an approved operating budget. Therefore, an allotment is a subdivision of an appropriation that provides the funding authority for an official to accomplish a specific function or mission.