BUDGET AUTHORIZATION

A budget authorization is granted after the appropriation bill is signed by the President. The following paragraphs describe the making of a budget authorization.

STEPS IN BUDGET PREPARATION

The annual budget of the Navy is prepared in several steps. It starts when the director of the Office of Management and Budget requests the Secretary of Defense (SECDEF) to submit the DOD budget estimate. The SECDEF provides the guidelines for budget preparation and directs the Secretary of the Navy (SECNAV) to prepare the budgetary requirements for the Navy. The SECNAV determines the Department of the Navy (DON) policies, directs the preparation of and reviews and approves the Navy program objectives. With the assistance of the Comptroller of the Navy, the Chief of Naval Operations (CNO), and Commandant of the Marine Corps, the SECNAV prepares the Navy program objectives. The Navy program objectives are issued to offices, commands, bureaus, and Headquarters, U.S. Marine Corps. The Comptroller of the Navy requests these organizations to submit their requirements and estimated costs. After the Comptroller of the Navy reviews the estimates, they are forwarded to the SECNAV. After review, the SECNAV transmits the Navy budget estimates to the SECDEF. The Comptroller of the DOD reviews and make recommendations to the SECDEF to submit the budget estimates to the Office of Management and Budget. The director of the Office of Management and Budget reviews the estimates, make revisions to show the President's policy, and prepares the President's budget estimate for submission to the Congress by the President.

CONGRESS

The House and Senate review the budget presented by the President. An appropriation bill, containing the budget figures as modified by changes agreed upon by both the House and Senate, is forwarded to the President for signature.

PRESIDENT

When the President signs the appropriation bill, it becomes a law and an appropriation act.

TREASURY DEPARTMENT AND GENERAL ACCOUNTING OFFICE (GAO)

Upon receipt of a copy of the appropriation act, the Treasury Department draws an appropriation warrant and forwards it to GAO for countersignature. The GAO analyzes, countersigns, and returns the warrant to the ^{Treasury Department.} The Treasury Department provides a copy of the warrant to the DON as a notification that the appropriation is available for obligations and expenditures.

MAJOR CLAIMANT/SUBCLAIMANTS

The operating funds identified by the subhead are allocated by the CNO to the major claimants (for example, fleet commanders). The fleet commanders issue expense limitations to themselves for fleet level functions and to the type commanders. The type commanders, in turn, issue operating budgets to shore activities designated as responsibility centers. Type and fleet commanders also issue operating budgets to themselves as responsibility centers for the following expenses

l Centrally managed programs (such as ship overhaul) . Expenses for their own staffs

Expenses for their assigned ships, squadrons, and other units

APPROPRIATIONS

The different types of appropriations are described in the following paragraphs.

ANNUAL APPROPRIATION

The annual appropriation is generally made for the current operating and maintenance expenses of the DON. It becomes available at the beginning of the fiscal year as designated by the appropriation act. These appropriations are available for payment of obligations incurred only during that fiscal year; however, they are available for payment of such obligations for 2 years thereafter. When the appropriation expires for obligations at the end of a fiscal year, the unobligated balance is transferred to the surplus of the Treasury. At the end of 2 years of availability y, the balance remaining, representing unliquidated obligations less reimbursements that are to be collected, is transferred to the successor account.

CONTINUING APPROPRIATIONS

A continuing appropriation is an appropriation that remains available until exhausted or until the purpose for which it is made has been accomplished. When the purpose of the continuing appropriation is accomplished, the amount equal to the total of unliquidated obligations, less the total of reimbursements to be collected, is transferred to the successor account. The remaining unobligated balance is transferred to the surplus of the Treasury.

MULTIPLE-YEAR APPROPRIATIONS

This appropriation is generally made for the oprating and maintenance expenses of the DON. It becomes available for obligations and expenditures at the beginning of the fiscal year designated in the appropriations act unless otherwise stated in the act. It is available for payment of obligations incurred only during the fiscal years specified in the act. However, it is available for payment of such obligations for 2 years thereafter. These 2 years maybe extended by Congress. At the end of the last fiscal year included in the appropriation, when the appropriation expires for obligation purposes, the unobligated balance is transferred to the surplus of the Treasury. At the end of the 2-year period of availability, the balance remaining (unliquidated obligations less reimbursements to be collected) in the account is transferred to the successor account.

TRANSACTIONS

All expenditures must have the authorization to be expended from available funds. Transactions develop through stages of reservation, commitment, obligation, and expenditure.

RESERVATION

A reservation is an administrative action that identifies funds set aside for planning purposes before establishing a commitment. Reservations are not maintained as part of official records. However, if a record is maintained, it is included in the minimum unofficial records of the holder of authorization or OPTAR.

COMMITMENT

A commitment is a firm reservation of funds based upon firm procurement directives, orders, requisitions, or an authorization to create obligations.

OBLIGATION

An obligation is incurred when an order is placed, a contract is awarded, a service is received, or a requisition is posted against the appropriation.

EXPENDITURE

An expenditure is the use of funds to cover obligations. Expenditures must be charged to the

appropriate funds only. A fund is properly chargeable with all expenditures necessary to accomplish the purpose for which it is established. For example, the appendices of NAVSO P-3013-2 list the fund codes that need to be used for each specific material or services.