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Federal Accounting Corner

Recording Continuing Resolutions – An Update

A year ago I wrote a column explaining that the SGL guidance for continuing resolutions (transaction A104) said not to post cash and equity, but the definition for 1010 Fund Balance with Treasury said that it should be posted for a continuing resolution. In addition, a Treasury edit requires that proprietary cash match budgetary cash, including continuing resolutions, but there is another edit requiring proprietary cash to match what is in Treasury's own system, which is not updated for continuing resolutions. Treasury's SGL Board has now resolved this problem.

Continuing Resolutions

When Congress does not pass the appropriations in time for the start of the new fiscal year, they frequently pass a continuing resolution, which provides agencies with limited authority to carry on current operations. Because continuing resolutions are supposed to be a short-term, stopgap measure, Treasury does not fund them with warrants, but rather waits for the actual appropriation law to be passed. Treasury permits agencies to disburse funds into a negative cash position when this is due to a continuing resolution.

New Standard General Ledger (SGL) Guidance

An agency's cash is represented by account 1010 Fund Balance with Treasury. This year, the SGL Board has added a new account, 1090 Balance with Treasury under a Continuing Resolution. This account will support the budgetary balances without causing a disagreement with Treasury's cash system. The relevant SGL transactions are A128 and A196 through A199.

Say that Congress passes a continuing resolution to fund the month of October at 90 percent of last year's levels. The agency had a fund with a $10 million appropriation last year. The amount of the continuing resolution would thus be $9 million annualized or .9 * 31 / 365 = 7.64383% in absolute terms. The entries recorded would be:

Debit  4119 Other Appropriations Realized                               9,000,000
    1090 Balance with Treasury under a Continuing Resolution  764,383
    Credit  4450 Unapportioned Authority                                             764,383        
        4395 Authority Unavailable for Obligation                                         
            Pursuant to Public Law – Temporary                          8,235,617
        3101 Unexpended Appropriations - Appropriations Received  764,383

Depending on how one's accounting system is set up, the easiest way to implement this could be to create an entry for the annualized continuing resolution which debits 1090 and 4119, and credits 4450 and 3101 (in the above example, for $9 million). Then a second entry reduces the annualized down to the current appropriation level, with a debit to 4450 and 3101, and a credit to 4395 and 1090 (for $8,235,617). If the continuing resolution is extended, the second entry is reduced. OMB's automatic apportionment would debit 4450 credit 4510 as usual. All disbursements would continue to use the 1010 account, which is allowed to go negative (though the net balance of 1010 and 1090 should not go negative). If the system tracks multiple funding sources, then the continuing resolution could be entered as an anticipated amount, to segregate it and also so that it will expire at the end of the year if accidentally left in place.

Ending the Resolution

When an actual appropriation comes in, 1090 has to be replaced by 1010, the balance in 4395 moves to 4450, and the annualized amount is likely to be different. The SGL guidance shows the posting for the net difference. If the above continuing resolution is replaced by an appropriation of $10.5 million, the net entry would be:

Debit  4119 Other Appropriations Realized                               1,500,000
    4395 Authority Unavailable for Obligation
        Pursuant to Public Law – Temporary             8,235,617
1010 Fund Balance with Treasury                                 10,500,000
Credit  4450 Unapportioned Authority                                          9,735,617        
            1090 Balance with Treasury under a Continuing Resolution    764,383
            3101 Unexpended Appropriations - Appropriations Received 9,735,617

In some cases, it may be easiest to back out the continuing resolution entries (both annualized and the reduction to current) and enter a regular appropriation entry for the full amount. The apportionment and lower-level budgets would then be adjusted as normal.  — by Simcha Kuritzky, CGFM CPA

This column is provided as part of a free exchange of ideas in federal accounting, and is not reviewed substantively before publication. Please send all comments, queries, or corrections to Simcha.Kuritzky@CGIFederal.com.