text: Accounting Support and Cost Management
  * Ensure the accounting classification cited on the obligation document is appropriate for the
  stated purpose of the obligation.
  * Ensure the amount obligated meets statutory and regulatory provisions.
  * Ensure the obligation is recorded accurately and in a timely manner.
  * Review on a continual basis unliquidated obligations and unobligated commitments.
  * Prepare for mandated formal joint reviews.
  5-14. Each MDEP, budget activity group, or functional cost account (FCA) enables financial managers to
  monitor obligations. In some cases, special program codes are designated by the CJCS at the operational or
  strategic level to capture and report costs for specific contingencies, programs, or exercises. Financial
  accounts require maintenance to ensure accuracy within the information systems. A key tool used to
  perform maintenance on accounts is the non-stock fund orders and payables (NSFOP) report. Financial
  managers must continuously monitor the NSFOP to find obligations in excess of disbursements, duplicated
  obligations, negative un-liquidated obligations (NULOs), credits, and accounting or ordering mistakes.
  Management of this report assists in the identification of available unused funds.
  5-15. Obligations must be recorded no later than 10 calendar days following the day that an obligation is
  incurred (to include obligations incurred when invoices are overpaid or duplicate payments are made).
  Every effort shall be made to record an obligation in the month incurred. DODFMR Vol. 3, chapter 8 and
  DFAS Reg. 37-1 chapter 8 contain procedures and policy governing obligation management and should be
  consulted continuously as changes to these regulations are common.
  RECORDING OBLIGATIONS
  5-16. When recording obligations —
  * Record obligations in the accounting classification cited on the obligating document. If the
  accounting classification is in error, request an amendment or contract modification.
  * Record obligation adjustments for the difference between actual and original amounts.
  * Adjust obligations for written changes if they are binding on the contractor without further
  action.
  * Record obligations providing for a discount at the net price unless doing so is not cost effective,
  according to Treasury guidelines. If the servicing accounting system automatically de-obligates
  the amount of the discount when the discount is taken, then record the obligation at the gross
  amount.
  * If the contract provides for annual terms with options to extend the terms in subsequent years,
  obligate for the amount required to be procured by the U.S. Government in the first year. Record
  the obligation for each option year when the option is exercised.
  * Adjust obligations to amounts shown on travel authorizations or validated orders when
  documents are received.
  ESTIMATED OBLIGATIONS
  5-17. Obligations may be recorded based on estimates. When actual obligation amounts become known,
  reverse and replace estimated obligations with actual obligations. The estimates and reversals are
  accomplished using DD Form 2406, Miscellaneous Obligation Document. Serviced activities and
  accounting activities will jointly ensure the actual obligation document is received to replace the DD Form
  2406.
  OBLIGATION DOCUMENTATION
  5-18. Documentary requirements for recording obligations are provided in 31 USC 1501(a). When
  signatures are required to validate obligations, sign the documents before the cited funds expire. Show the
  actual date of each signature. When more than one signature is required, record the obligation on the date
  of the last required signature. For additional guidance on rules of obligation see DFAS Regulation 37-1,
  chapter 8.