Idaho Bulletin 250-8-1

February 27, 2008

SUBJECT:  FNM - 2008 Annual Review of Open Obligations

TO:   All Employees, NRCS, Idaho

Purpose.  To electronically transmit 2008 Annual Review of Open Obligations

Expiration Date.  September 30, 2008

Action: All Contract Item Reviews Completed and Reports sent to State Office by COB April 10, 2008
THIS IS A MANDATORY DEADLINE WITH NO EXTENSION

BACKGROUND

NRCS is required to annually review all unliquidated (open) obligations that have been inactive for twelve months or more in order to properly report our obligation balances, and to certify the validity of our agency financial statements.  USDA regulation number 2230-001 as well as other OMB directives require these annual reviews to properly report obligation balances, certify the validity of obligated balances, make funds available that otherwise would not be used, reduce the risk of misuse and theft of funds, and improve the Treasury Department’s ability to forecast outlay and borrowing needs.

NRCS will soon commence several important initiatives to improve the accuracy and integrity of the data in our financial statements.  These activities will likely impact all segments of the organization, including field, state and national levels.  NRCS is also undergoing a full financial audit by an independent firm that will examine all of our financial accounts and interests.  These activities will chart the future direction of NRCS program and financial procedures and will impact all aspects of our financial and conservation activities including the development of typical long-term contracts under our conservation programs and the way we enter into agreements with our conservation partners.

This bulletin provides instruction on actions required by April 10, 2008 to reduce the invalid open obligations in all NRCS accounting systems, including ProTracts.  This is an extremely important issue for NRCS and needs to be addressed in accordance, as a priority.

For the purpose of this bulletin the following definitions apply:

Inactive means there has been no payment or modification of the contract item specified in the FFIS obligation, such as a contract item in an EQIP contract or a product or service specified in an agreement.

Unliquidated obligations are the amount of financial obligations not yet expended or paid out in our financial system (FFIS).

Deobligation means the cancellation, release, or downward adjustment of a previously recorded obligation.

First year of a contract means within the 12 months from the date the contract was signed by NRCS.  If a contract is signed on May 31, 2005, then 12 months would end on May 30, 2006.  Note: A practice must begin within this 12 month period unless a waiver is granted.  If one is not started, then contract is “out of compliance”.

Maximum length of a contract is ten years.  The first year of a contract is considered the year it is signed.  For example: If a contract is signed on May 30, 2005 for a 10 year maximum length, the expiration of that contract is May 30, 2014. Therefore, all practices would have to be certified in ProTracts by May 30, 2012 (no practices can be installed in the 10th year) and payments should be issued before the annual closing of the books in September.

The goal of this activity is to review all open obligations and release (deobligate) those funds that are no longer needed for the specified contract item or product, and to certify the validity of existing obligations.  Note: This does not mean to delete a practice to bring the contract into compliance.  All regulations and policy still apply.

In 2008, National Financial Management Division (FMD) will be reviewing and requiring documentation for 100% of FFIS obligations that have been inactive for 12 months or more as of December 31, 2007.  A sample of unliquidated obligations that show activity in the past 12 months, will still be selected for review under our OMB Circular A-123, Appendix A, testing process.

More documentation will be required on site to support inactive obligations in 2008 compared to what was required in 2007.  Detailed documentation for what is referred to as “the bona fide purpose and a justification for the period of inactivity” will be required.  Documentation materials will be maintained at the field office level for a period of five years and will be made available for any reviews or audits at any time.

All ProTracts contracts selected for this review are listed on a spreadsheet prepared by FMD which will be sent to each office under a separate e-mail.  All listed contracts have contract items that were scheduled to be completed in 2007 and/or prior years.  All the contracts selected for this open obligation review are, in fact, behind schedule and in need of a “Contract Review” per requirements in The Conservation Program Manual (CPC), Title 440, Part 512.  All contracts

listed are to be addressed even if they have been completed, terminated or cancelled since this information was downloaded on December 31, 2007 by the National FMD.  Because they are listed on the FMD spreadsheet, the status has to be reported also.

Idaho NRCS will use the Contract Review module in ProTracts in conjunction with the attachment “Criteria for Reviewing Obligations and Documentation Required” for the review process to manage the Farm Bill contracts.  A Net Replay recording and PowerPoint presentation on the use of the ProTracts Contract Review module released in 2007 is available on the ProTracts homepage.

Please read the attached document carefully for directions on the requirements and review process.  It is important that you remember that there is no extension to the deadline.  If you have any questions please e-mail both Jan.Mervin@id.usda.gov and Mary.Goode@id.usda.gov.  One of them will try to get an answer back to you right away.

/s/
RICK NOBLE
ACTING STATE CONSERVATIONIST             

Attachment

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