Economic Development:

DOE's Three Restricted Reserves of Unobligated Funds

RCED-96-208R: Published: Aug 8, 1996. Publicly Released: Aug 8, 1996.

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GAO reviewed the Department of Energy's (DOE) three restricted reserves of unobligated funds. GAO noted that: (1) DOE established the reserves to respond to unforeseen departmental funding requirements; (2) these reserves include the Prior-Year Deobligation Reserve, the Prior-Year Cost Adjustment Reserve, and the Project Overrun Reserve; (3) the reserves are composed of deobligated funds that no longer have a defined need and are unavailable for use unless released by DOE; (4) DOE has not consistently followed its own criteria for placing funds in or using funds from the reserves; (5) funds have been allocated from the reserves without proper documentation and for purposes that do not meet the DOE criteria; and (6) reserve guidelines need to be revised to better reflect departmental needs.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: After reviewing its existing policies and guidance related to the Prior-Year Deobligation Reserve, the Prior-Year Cost Adjustment Reserve, and the Project Overrun Reserve, DOE's Director, Office of Budget issued new guidance on December 26, 1996. The guidance established the criteria governing the restricted reserves and was provided to staff analysts that review/assess Headquarters program office requests for use of the subject funds.

    Recommendation: The Acting Chief Financial Officer, DOE, should clarify the purpose for the Prior-Year Deobligation Reserve, the Prior-Year Cost Adjustment Reserve, and the Project Overrun Reserve and revise, as necessary, the criteria governing the three reserves.

    Agency Affected: Department of Energy: Office of the Chief Financial Officer

  2. Status: Closed - Implemented

    Comments: The revised guidance emphasizes the importance of ensuring that requests for use of funds from the reserves adhere to the established policies and criteria and that related supporting documentation is adequate and credible. In order to obtain better cooperation and assistance in improving administration of the subject funding, the guidance was also provided to cognizant headquarters program organizations.

    Recommendation: The Acting Chief Financial Officer, DOE, should instruct officials within his office to place a high priority on following the criteria and better documenting that the criteria have been followed.

    Agency Affected: Department of Energy: Office of the Chief Financial Officer

 

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