GAO Studies of Yearend Spending

GAO has conducted numerous reviews of agency policies, procedures, and practices. While few of these reviews are directed specifically toward yearend spending issues, reports have addressed yearend spending practices at the General Services Administration, Maritime Administration, Department of the Army, Environmental Protection Agency, Department of Transportation, and the former Office of Economic Opportunity.

These studies have found that funds are sometimes obligated at the end of the year to prevent authority from lapsing. This can lead to problems with the validity of yearend obligations, questions on the current needs for supplies or services, as well as the fairness of prices negotiated without competition and under hurried conditions. Recommendations in previous reports have generally been directed to improvements in procurement practices for the specific situations involved. Congress has recognized that excess funds have been used at yearend for items that are not valid requirements of the specified year and has taken action in appropriation acts to limit the amount of obligations that can be incurred at the end of the fiscal year. Two appropriations acts contain such limitations, the Department of Defense Appropriation Act, 1979 and the Foreign Assistance and Related Programs Appropriation Act, 1979. While these actions may limit the total amount of obligations to be incurred near the end of a fiscal uear, they do not guarantee that such obligations are for goods or services needed at that time or that proper procurement practices are followed. A significant underlying problem is that there are no incentives not to spend the funds appropriated. Agencies often fear that future appropriations will be reduced if current funds are not spent by the end of the fiscal year. Unobligated balances that are carried forward raise questions as to whether too much funding was provided or whether the programs being carried out in a timely manner.