Understanding Obligation and Deobligation in Resou
Obligation: legally reserving funds for expenses e.g: travel orders. Deobligation: adjusting obligations downward when actual costs are less, freeing funds for other needs. Ensures efficient effective use of finite resources in government operations.
Mason Bennett
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Obligation vs Deobligation
It is important to remember that resources are finite, and because of this we must distinguish
between "wants" and "needs".
Obligation refers to the legally binding setting aside of funds towards a requirement, such as goods
or services. For example, an obligation is created when travel orders are approved for a Soldier
heading to a school. This obligation reserves their plane ticket, lodging, rental car, and other
anticipated expenses.
Deobligations are downward adjustments of previously incurred obligations. Using the previous
example, when the Soldier returns from the school, he or she files a voucher for the actual expenses
occurred. If the actual expenses are less than the original estimate from the travel orders, then a
deobligation needs to occur to ensure the excess funding is returned and is made available for the
unit to spend towards another requirement.
The Army operates under the mandate to use all available resources in the most effective and
efficient means possible to support the combatant commander. Although not mutually exclusive,
these two goals—effectiveness and efficiency, do not have the same meaning.
* Effectiveness describes how well consumed resources achieve the desired outcome or
endstate or simply stated, "doing the right thing."
* Efficiency speaks to the manner in which those resources are consumed in order to
produce the maximum amount of output regardless of whether the output achieves the
desired outcome—"doing things the right way."
Obligation
• A legal liability of the government for the payment of goods and services ordered or received,
or a legal duty on the part of the United States that could mature into a legal liability by virtue
of actions on the part of the other party beyond the control of the United States. Payment
may be made immediately or in the future. An agency incurs an obligation, for example,
when it places an order, signs a contract, awards a grant, purchases a service, or takes other
actions that require the government to make payments to the public or from one government
account to another.
Deobligation
* An agency's cancellation or downward adjustment of previously incurred obligations.
Deobligated funds may be reobligated within the period of availability of the appropriation.
For example, annual appropriated funds may be reobligated in the fiscal year in which the
funds were appropriated, while multiyear or no-year appropriated funds may be reobligated
in the same or subsequent fiscal years.
It is important to remember that resources are finite, and because of this we must distinguish
between "wants" and "needs".
Obligation refers to the legally binding setting aside of funds towards a requirement, such as goods
or services. For example, an obligation is created when travel orders are approved for a Soldier
heading to a school. This obligation reserves their plane ticket, lodging, rental car, and other
anticipated expenses.
Deobligations are downward adjustments of previously incurred obligations. Using the previous
example, when the Soldier returns from the school, he or she files a voucher for the actual expenses
occurred. If the actual expenses are less than the original estimate from the travel orders, then a
deobligation needs to occur to ensure the excess funding is returned and is made available for the
unit to spend towards another requirement.
The Army operates under the mandate to use all available resources in the most effective and
efficient means possible to support the combatant commander. Although not mutually exclusive,
these two goals—effectiveness and efficiency, do not have the same meaning.
* Effectiveness describes how well consumed resources achieve the desired outcome or
endstate or simply stated, "doing the right thing."
* Efficiency speaks to the manner in which those resources are consumed in order to
produce the maximum amount of output regardless of whether the output achieves the
desired outcome—"doing things the right way."
Obligation
• A legal liability of the government for the payment of goods and services ordered or received,
or a legal duty on the part of the United States that could mature into a legal liability by virtue
of actions on the part of the other party beyond the control of the United States. Payment
may be made immediately or in the future. An agency incurs an obligation, for example,
when it places an order, signs a contract, awards a grant, purchases a service, or takes other
actions that require the government to make payments to the public or from one government
account to another.
Deobligation
* An agency's cancellation or downward adjustment of previously incurred obligations.
Deobligated funds may be reobligated within the period of availability of the appropriation.
For example, annual appropriated funds may be reobligated in the fiscal year in which the
funds were appropriated, while multiyear or no-year appropriated funds may be reobligated
in the same or subsequent fiscal years.
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Subject
Finance