text: Chapter 5
  manager ensures the accounting records will accurately reflect the accrued expenditure/expense and
  disbursement of payment to the obligation.
  ACCRUED EXPENDITURES/EXPENSE STATE
  5-10. Accrued expenditures is a term used for the credits entered into the budgetary accounts to recognize
  liabilities incurred for (1) services performed by employees, contractors, other government accounting
  entities, vendors, carriers; (2) goods and other tangible property received; and (3) items such as annuities or
  insurance claims for which no current service is required. Accrued expenditures are categorized as either
  paid or unpaid. Expenses are the value of goods or services actually used or consumed during the current
  period. Expenses are recognized in the period in which they occur even if payment for them is made in a
  different period. Expenses are recorded when incurred (goods are received and services performed even
  though the payment of the expense may take place, in whole or part, in another accounting period).
  5-11. To illustrate, consider the activities that occur during this stage in terms of a transaction tied to a
  contracting action. Following contract award, the vendor performs the requested service or delivers the
  requested supplies to the receiving activity. The receiving activity is the unit or activity that first receives
  the goods or services. In many instances, the receiving activity may be the same as the activity originating
  the request. The receiving activity is responsible for inspecting and accepting the delivered goods or
  services and submitting a receiving/acceptance report to the supporting FM unit responsible for vendor
  payment. This acceptance of goods or services represents the accrued expenditure/expense stage in the
  accounting system. The receiving report is written evidence that indicates government acceptance of
  supplies delivered or services performed and may be submitted electronically IAW DODFMR vol. 4
  chapter 8.
  DISBURSEMENT STAGE
  5-12. A disbursement is the payment for goods and services received. Continuing from the previous
  illustration, the disbursement stage begins with the vendor submitting an invoice to the billing or paying
  office designated in the contract once the goods or services are delivered. The vendor is responsible for
  providing the goods and/or services as specified in the contract. The FM unit serving as the billing or
  paying office processes the invoice for payment by reviewing the contract, the receiving/acceptance report,
  and the invoice to certify that the payment is appropriate and correct for payment. The FM unit then pays
  the vendor for the delivered goods and/or services IAW the terms of the contract. Disbursement of the
  vendor payment may occur simultaneously along with the delivery of the requested goods and/or services
  when employing a FOO and PA to satisfy a local procurement using an SF44. Disbursing operations were
  previously discussed in chapter 3.
  OBLIGATION MANAGEMENT
  5-13. Obligation management is a basic function of financial management operations and provides
  fiscal controls to protect against Anti-Deficiency Act (ADA) violations. Obligation management is
  described in greater detail due to the ADA and its importance to prevention. Tracking obligations enable
  financial managers to —
  * Calculate and report available funding.
  * Determine if commitment accounting systems interface issues are occurring.
  * Monitor non-stock orders and payables to determine obligation adjustments.
  * Locate obligations in excess of disbursement and de-obligate the balance for other funding needs
  or those that require increase.
  * Identify undelivered or delayed orders.
  * Determine cancellations.
  * Identify patterns in obligation estimates versus actual expenses.
  * Identify increased or decreased obligation performance in programs, AMSCOs or cost centers.
  * Calculate the obligation rate at year-end closeout.
  * Review obligation documents for compliance.