FINANCIAL MANAGEMENT POLICY MANUAL

6. LIMITATIONS
a. Statutory.
Statutory limitations are those fiscal constraints on the obligation and
expenditure of appropriated funds imposed by restrictions stated in
law. The major statutory limitations is that contained in 31 U.S. Code
1517, which prohibits any act which will cause an obligation or
expenditure in excess of the apportionment or reapportionment made
for an appropriation or any administrative subdivision thereof,
including allotments. Title X of the Congressional Budget and
Impoundment Control Act of 1974, P.L. 94-344, impacts on the
ability of the Executive Branch to impound (rescind or defer) funds.
Detailed interpretive and procedural guidance on these impoundments
is contained in the current issuance of NAVCOMPTINST 7300.104
and DON Budget Guidance Manual. Another significant statutory
limitation is contained in 31 U.S. Code 1301. This provision of law
pertaining to the application of monies appropriated requires that
appropriated funds be used only for the programs and purposes for
which the appropriation is made. In addition, certain other provisions
of law that must be administered as limitations establish the maximum
or minimum amount that may be used under an appropriation or
appropriations for a specified purpose. These limitations include such
items as the amount available in the Operation and Maintenance,
Navy, appropriation for emergency and extraordinary expenses, also
called Contingencies of the Navy and available for purposes certified
by the Secretary of the Navy, or the floor established in the operation
and maintenance appropriations for maintenance of real property
facilities (i.e., a specified amount available only for that purpose).
These limitations, whether they establish maximum or minimum
amounts, require special systems for administration, accounting, and
reporting to insure compliance. There are other legal limitations
unrelated to specific amounts. For example, there is a basic
prohibition against the expenditure of Federal funds for purposes not
authorized by law. In the Department of the Navy an example of such
expenditure is that incurred for entertainment. If such costs are not
within the authorization granted under Contingencies of the Navy, they
may not be funded by appropriations.
b. Limitations Imposed by Grantors.
Other limitations or constraints on financial authority (operating
budget authority or obligational authority) may be imposed by the
grantor at any level as further subdivisions of funds are made to the
next subordinate level. These constraints may be separated into two
major divisions: those which carry the applicability of statutory
constraints, under 31 U.S. Code 1512, as specific and absolute
limitations; and those which are subject to flexibility without the
Financial Management Policy
1-13