oversight

[Comments on GPO's Use of Balances in Revolving Fund for Operating Expenses]

Published by the Government Accountability Office on 1997-07-25.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Office of the General Counsel




      B-260606



      July 25, 1997


      The Honorable Michael F. DiMario
      Public Printer
      U.S. Government Printing Office

      Dear Mr. DiMario:

      You have requested our opinion concerning the use of balances credited to the
      Government Printing Office's (GPO's) revolving fund established under 44 U.S.C.
      § 309. Specifically, you ask whether you may use balances in the fund that you
      refer to as "fiduciary" funds to meet the normal operating expenses of GPO. The
      "fiduciary" funds consist of balances for such items as advances from customers,
      accrued salaries and leave, and estimated incentives and lump-sum leave payments
      for expected early retirements.

      In the past, GPO has experienced significant cash shortages in its revolving fund
      due to increasing costs, which it was unable to pass on to its customers. These
      shortages threatened GPO's ability to fund its daily operating costs. You advise that
      auditors informed you that money that GPO has traditionally restricted as
      "fiduciary" funds can be used to cover the costs of daily operations. You are
      concerned that using "fiduciary" funds to pay for operating expenses may conflict
      with the holding in a 1992 Comptroller General decision, 71 Comp. Gen. 224 (1992).
      In that decision the Comptroller General concluded that the National Technical
      Information Service (NTIS) could not use funds advanced by customers except to
      cover expenses "directly related to services performed or to be performed" for those
      customers.

      GPO finances most of its operations out of its revolving fund. The fund

             "is available, without fiscal year limitation, for--
                 "the operation and maintenance of the Government Printing Office
             (except for those programs of the Superintendent of Documents which
             are funded by specific appropriations) . . . ."


                                                                                   1238626
44 U.S.C. § 309(a).   The statute further states that:

      "The fund shall be---
          "(1) reimbursed for the cost of all services and supplies furnished,
      including those furnished other appropriations of the Government
      Printing Office . . . ; and
          "(2) credited with all receipts including sales of Government
      publications, waste, condemned, and surplus property and with
      payments received for losses or damage to property."

44 U.S.C. § 309(b).

The enabling statute further requires that Congress approve GPO's annual budget
for expenditures from the revolving fund. 44 U.S.C. § 309(c). Thus, the Legislative
Branch Appropriations Act, 1997 provides as follows:

      "The Government Printing Office is hereby authorized to make such
      expenditures, within the limits of funds available and in accord with
      the law . . . as may be necessary in carrying out the programs and
      purposes set forth in the budget for the current fiscal year for the
      'Government Printing Office revolving fund . . . '"

Pub. L. No. 104-197, 110 Stat. 2394 at 2410. Since GPO's annual budget indicates
that it finances almost all its operations through the revolving fund, the fund "is
analogous to an agency's annual appropriation for salaries and expenses under
which all necessary expenses of an agency can be paid." B-216943, March 21, 1985.

By the terms of its enabling statute, the GPO revolving fund is available to meet the
operating expenses of the GPO. 44 U.S.C. § 309(a). The revolving fund is a single
fund consisting of all income received by GPO for services and goods it provides to
other agencies and for sales of publications. Although GPO has administratively
divided the fund into several accounts, it may move budgetary resources among
these accounts to the extent they are not already obligated.

According to your submission, GPO restricts balances in the fund, reserving them
for certain purposes. One category of restricted cash is "Fiduciary Funds," which at
the time of your submission consisted of Advances From Customers for Sales of
Publications and Printing and Binding Work, Estimated Incentive Pay for Early
Retirement, Estimated Lump Sum Annual Leave for Early Retirees, Accrued
Salaries, Wages & Withholdings, and Accrued Annual Leave. Your submission
indicated that the advances from customers are of two types--deferred revenue, i.e.,
customer orders that have been placed but not yet filled, and depositor accounts,
i.e., customer advances for orders that may be placed in the future.



                                                                                 1238626
In your letter you expressed concern that GPO's use of customer advances to cover
operating expenses would be contrary to the holding of the Comptroller General in
71 Comp Gen. 224 (1992), and accordingly that this practice might violate the
Antideficiency Act, 31 U.S.C. § 1341(a)(1). In the cited decision the Comptroller
General decided that the NTIS could not use funds advanced by customers except
for expenses "directly related to services performed or to be performed." 71 Comp.
Gen. 224. The decision in that case was based on the language of the statute that
created the special account out of which NTIS operated. That statute provided that:

      "payments for work or services performed or to be performed . . .
      shall be deposited in a special account or accounts which may be used
      to pay directly the costs of such work or services, to repay or make
      advances to appropriations or funds which do or will initially bear all
      or part of such costs, or to refund excess funds when necessary . . . . "

15 U.S.C. § 1526 (emphasis added). We held that this language permitted NTIS to
use customer advances that represented payment for subscriptions to meet the cost
of the subscription. However, advances to cover possible future subscriptions were
not payments for services "performed or to be performed" and thus were not
available to cover NTIS operations.

GPO's revolving fund statute differs significantly from the NTIS statute. The GPO
revolving fund is credited with receipts from many sources, not just with payments
for work or services performed or to be performed. Further, the GPO revolving
fund is available for the operation and maintenance of GPO, not just to pay the
direct costs of work or services performed.

Nonetheless, the underlying rationale of the NTIS decision does apply to the
amounts which customers have advanced to GPO in anticipation of orders to be
placed in the future. These amounts represent funds that GPO holds as a custodian
for its customer. They do not represent reimbursements "for the cost of all services
and supplies furnished" (44 U.S.C. § 309(b)(1)), and they are not "receipts" that may
be credited to the revolving fund (44 U.S.C. § 309(b)(2)) before they are earned.
GPO may not treat these advances as budget authority to support its operations
until the customer places a proper order for goods or services to be provided by
GPO.

Although OMB Circular A-34 is addressed to Executive departments and agencies,
and technically does not apply to the GPO revolving fund, it does state the proper
criterion for determining whether reimbursements to a revolving fund may be
considered budgetary resources against which obligations may lawfully be charged.
Circular A-34 states:

      "In the case of reimbursable work involving goods and services
      provided to Federal Government accounts, budgetary resources

                                                                              1238626
        available for obligation from reimbursements are comprised of earned
        reimbursements and unfilled customer's orders. An earned
        reimbursement is the amount representing orders that have been filled.
        As with an earned reimbursement, an unfilled order is available for
        obligation. It is emphasized that there must be an order and a valid
        obligation from the ordering account before such reimbursable work
        creates budgetary resources available for obligation. For example, an
        advance from a Federal Government account without an order does
        not constitute budgetary resources available for obligation.
        Throughout the year these amounts are adjusted to the extent that
        orders are filled, cancelled, or new orders are received."

OMB Circular A-34, § 31.4, at page III-2 (1994)(emphasis added; bold and italic font
in original omitted)1.

With regard to the remaining amounts that are listed as fiduciary funds, the
"Accrued Salaries, Wages and Withholdings" and the "Accrued Annual Leave"
represent funds that have been obligated for the stated purposes. They may not be
obligated again to meet GPO's daily operating expenses. On the other hand, the
"Estimated Incentive Pay for Early Retirement" represent funds that have been set
aside as a reserve for the possible payment of incentives to early retirees. Since the
employees have not yet opted for early retirement they are not entitled to an
incentive, and therefore the funds are not obligated. It follows that these funds are
available to meet GPO's operating expenses.

We conclude that the "fiduciary" funds in the GPO revolving fund are available to
meet daily operating expenses as follows:


    Advances from             These are not yet earned.   Not Available
    Customers: Depositor
    Accounts
    Advances from             These are                   Available
    Customers: Deferred       reimbursements for
    Revenue                   orders placed.
    Estimated Incentive Pay   These represent reserves    Available
    for Early Retirement      but are not obligated




1
 OMB Circular A-34 has similar rules for handling reimbursements involving goods
and services provided to the public except that the amount available for obligation
is limited to the amount of advances actually received by the revolving fund. Id.

                                                                              1238626
 Accrued Salaries, Wages   These funds are obligated   Not Available
 and Withholdings
 Accrued Annual Leave      These funds are obligated   Not Available

Sincerely yours,




Robert P. Murphy
General Counsel




                                                                       1238626
B-260606



July 25, 1997



DIGEST


Government Printing Office may use so-called "fiduciary" funds in its revolving fund
to meet its daily operating costs to the extent it has earned those funds and has not
already obligated them for another purpose. Advances from goverment customers
that represent orders placed but not yet filled have been "earned" and are thus
available to support GPO operations. However, advances from government
customers that are in anticipation of orders to be placed in the future are not
earned are not available to GPO.




                                                                              1238626