The A to Z of Fiscal Law
The term "fiscal law" is used frequently in my world of government contracts, but you might be surprised to find out what it actually means. In my experience, fiscal law is very rarely addressed in government contracts training courses, manuals, or even in the context of courses on related topics, such as appropriations law. Fiscal law is a topic that is isolated in its own right, with very few people who are aware, at any degree of specificity, of its importance. But it is a topic that undoubtedly should be addressed in the context of government contracts compliance and training.
Fiscal law can generally be defined as the body of law that regulates the federal government’s receipt and expenditure of funds. Perhaps one of the best explanations of what fiscal law is came from the General Accounting Office (GAO), which stated: The term "fiscal law" refers to that body of law which governs the expenditure of public funds by the Federal Government, whose source is Article I, section 9, clause 7 the Constitution of the United States (U.S.C.A., Const. Art. I, 9, cl. 7), and which derives from both statute and common law. Specifically, fiscal law comprises those bodies of law regulating (1) the obligation of fund—a restriction on an agency’s power to contract in the absence of law authorizing the Government to obligate funds, including authority to obligate funds without appropriation (Payment of Contract pursuant to Legislative Authorization, B-299178, January 4, 2007); (2) the availability of funds—whether an appropriation exists to pay a legal liability; (3) the proper use of funds—limitations on the use of funds, such as the purpose limitations of appropriations; and, (4) the period of availability of funds—requirements regarding the period within which obligations must be incurred (Use of Funds, B-299178, July 24, 2007).
In other words, fiscal law is the legal foundation on which the federal government spends funds. Training on the basics of fiscal law can make the difference between getting paid – and the speed at which you get paid. Doing so can help you avoid violating appropriations law – which can have consequences for you and your organization. So, if you "dare cross the fence" – here are the basic principles you should know.
One: The Anti-Deficiency Act (31 U.S.C. § 1341 et seq.). When most people think of fiscal law, they likely think of the Anti-Deficiency Act. The Act states that federal employees may not: So , the Anti-Deficiency Act is important because it sets a clear prohibition against either incurring obligations or making expenditures that exceed an agency’s available appropriations.
Two: Obligations and Expenditures. The next set of fiscal law considerations involves the differences between "obligating" funds and "expending" funds. The two are distinct, and the terms are not interchangeable. In fact, even the General Accountability Office recognizes that some funds are "obligated" (meaning that legal right has been created or legal liability has been incurred, e.g., through the award of a contract) but are not yet "expended" (meaning that actual payment of agency funds has not yet occurred). It is important to be familiar with this distinction so you can avoid running afoul of the Anti-Deficiency Act.
Three: Incurring Obligations. Obligations are created by contract award, order placement, acceptance of goods or services, or third-party guarantees. For example, if a contractor enters into a noncompetitive award and the contracting officer did not execute a proper sole-source justification, then the contractor did not incur an obligation.
Four: Expenditures. Expenditures are broader than obligations. Expenditures are created by a third-party guarantee, delivery of goods or services, acceptance of the items by the government, receipt of a government invoice, or the disbursement of funds. If the government purchases items from vendors, enters into a new contract, or commits to pay a vendor in exchange for goods and services, that is an expenditure of funds. The take away is that expenditures are payments made for goods and services or related items, whereas obligations are created when a contract award is received that commits a vendor to provide goods and services to the government.
Recognizing and understanding the differences between obligations, expenditures, and different types of fiscal law regulations is important. Violation of the Anti-Deficiency Act can have dire consequences. For example, a former Army contracting officer was sentenced in 2012 to 18 months of incarceration after pleading guilty to violating the Anti-Deficiency Act by improperly expending funds on a government credit card.
Training on fiscal law can make the difference between getting paid – or not; expending funds consistent with fiscal law – or violating the Anti-Deficiency Act; or avoiding negative repercussions for your company. Do you "Dare Cross the Fence"?
Essential Elements of Fiscal Law Training
A core component of fiscal law training revolves around understanding the tax regulations that govern federal, state, and local government operations. Such training dives into the intricacies of the Internal Revenue Code, which sets the framework for income, property, and sales tax calculations. From a legal perspective, this includes not only compliance mechanisms, but the enforcement mechanisms in place to address intentional wrong-doings as well as potential accidental infractions. Another crucial element of fiscal law training is examining the various sources of government revenues. This includes reviewing the mechanisms behind tax collections, as well as the rules set forth by the IRS. Of particular note is the array of tax regulations and exemptions governing charitable organizations, which are often top-heavy in employment and often compel volunteers to take on sensitive leadership roles. In addition to covering the different forms of taxes collected by municipalities and states, fiscal law training covers the complex nature of government spending. A large portion of such trainings is typically focused on examining the multitude of rules used to manage the execution of government budgets. Understanding these complexities allows practitioners to seamlessly navigate the minutiae of spending guidelines. On a practical level, this includes training on the control mechanisms in place to enforce the rules governing the appropriation and expenditure of funds. Fiscal law training also dissects the multiple forms of repayment plans used by the government to address loan defaults. One such option is a supervisory role for the IRS to ensure money is correctly paid back over time. Another option involves discharging debts of the defaulted borrower through the sale of a secured asset.
Advantages of Fiscal Law Training
One of the top benefits of fiscal law training is an enhanced understanding of some of the most complex regulations in the country. There are few areas in the legal field that require such a solidified knowledge of government regulations, and that expertise is hard to come by without some formal education to back up years of practical experience. The courses offered by the Army Library Program help to teach a number of the most intricate and challenging areas of government contracting, from financial regulations to accounting, cost principles and legal funding requirements. Perhaps the biggest benefit of fiscal law training is the availability of a highly specialized skill set in high demand across the government sector. The knowledge imparted by these courses stretches further than just the immediate practitioner, with trained professionals able to easily move into a variety of advanced positions in their field. Possessing the tools needed to make informed decisions about resorting to the use of funds or whether the government should exercise an option, among other things, is an invaluable aspect of accepting one of these positions, and is critical in the assessment of probable success. Individuals who have undergone fiscal law training are tested to be highly competitive in one of the most sought after job sectors in the country, government contracting.
How to Select the Best Fiscal Law Training
When it comes to fiscal law training programs, there is no shortage of options to choose from. With varied levels of accreditation, price points, and curriculum specifications there are literally dozens of hours’ worth of video searching the Internet in store for you. Determining which program best suits your needs can be confusing. The following list provides a broad outline of common factors to keep in mind when selecting a program:
Accreditation
One of the first things to consider when choosing a program is the level of accreditation with which the program is awarded. Is the program affiliated with a college or university, or is it a credentialing workshop? Depending on where you fall on the fiscal law experience spectrum, one or the other may be more appropriate. Federal employees in need of reimbursement for course costs should take note that "tuition" will usually only be reimbursed where the course is college level. However, for other employees that may be the only option.
Curriculum
The curriculum of a program is another important factor to consider before making a decision . Some programs may do a deep dive into a specific aspect of fiscal law and others may give a general cross-section. It may also be wise to check the most recent time a program has updated its curricula. This may appear on the website or in the catalog if the program is attached to a college or university.
Faculty Expertise
The faculty involved with a program is another important factor to consider. Finding a program where faculty have expertise in fiscal law and related areas such as government contracting may give you additional valuable insight. Faculty may be practicing attorneys with years of experience or adjunct professors who specialize in teaching.
Cost
Program cost is another factor. Budgeting issues can be a concern for every employee and federal employees have more limited recourse than other professionals to investigate any available employer sponsored reimbursement or refundable programs. There is a large assortment of non-federal programs that seem to offer solutions to fit any budget. You may also be able to take courses online as well as in interactive formats.
Best-in-Class Institutions for Fiscal Law Training
Universities and educational institutes across the country have been working diligently in the area of fiscal law. Some of the notable players include the Air University, Naval Postgraduate School, Defense Acquisition University and National Defense University. The Air University offers joint and international site courses. These courses are normally done in a foreign country and their focus is on doing joint and combined exercises that help in gaining perspective on multilateral training opportunities. Similarly, Naval Postgraduate School also offers courses on fiscal law for members of the Navy, Marines and the DoD.
Defense Acquisition University offers formal training in fiscal law as well. The offered courses serve as foundation courses for trained professionals who wish to complete their requirements and advance to higher level acquisition career positions. Like the other military institutions, National Defense University also offers training on fiscal law.
Emerging Trends in Fiscal Law
The realm of fiscal law is becoming more intricate as governments and institutions evolve through digital transformation and global tax agreements. The United States is experiencing rapid shifts in how governments and citizens engage with electronic records, all while international tax agreements have introduced new challenges and considerations for fiscal law compliance. As the government moves to reliance on electronic record keeping and public digital engagement, the nature of record keeping under fiscal law will change as it will need to adapt to meeting the requirements of fiscal law, generally, and the requirements of the related statutory authority. The challenge will be in meeting both. As the government and the public continue to move towards more online transactions, the role of elusive formal requirements from contracts will become nearly obsolete. This will be particularly challenging when there are formal requirements of the law, i.e., the requirement for specific statutory language to effectuate an appropriation, which could soon be complicated as they are required to coexist with new, digital and informal channels. With electronic transactions, requirements for formal communications are largely eliminated as private information gathers electronically, where direct interactions and mutual consent are no longer strictly required as online downloads and electronic alerts may suffice. This creates challenges for a limited vision of fiscal law training which was previously supported largely by the formality of contracts. As global tax agreements continue to develop, the field of fiscal law is being expanded into areas such as procurement law, foreign distributions, and defense contracting. Whether it is through the 2017 Tax Cuts and Jobs Act or the establishment of the International Procurement Agreement , the landscape of fiscal law, as it relates to international issues, is growing to a larger focus on international business transactions, and how they interface with the domestic agenda. Further, the Global Forum on Transparency and Exchange of Information for Tax Purposes has issued directions that states that the U.S. should adopt direct reporting and exchange of information, which will require an expansion of fiscal law training as it relates to international matters. As technology improves, the expectations for understanding and making use of resources will follow suit. A limited understanding of the origin of an authority and its uses has historically sufficed; however, as resources become increasingly available, so too must the expectations for employees and practitioners. There is a need to develop a stronger awareness of the benefits of integrating resources into our everyday work, creating greater efficiency. The areas of law that impact fiscal law, and the governing agencies, are only becoming more complex. As such, the demand for properly trained employees will increase, and employees will be expected to identify and apply relevant requirements from multiple sources, without losing sight of the big picture. Physically and mentally speaking, this translates to longer days, later nights and more processing of information on a daily basis. An already demanding job will require additional training as a multi-faceted practitioner of the law. The need for a greater understanding of the ways in which fiscal law interacts with adjacent laws, such as the Anti-Deficiency Act, procurement law, Federal Acquisition Regulation (FAR) and other areas of practice will also bring about growing pains in the coming years.
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