UPDATED: OMB clarifies business rules

Editor's Note: This story was updated at 4:40 p.m. April 11, 2006, to correct what business rules OMB waived.

The Office of Management and Budget issued an interim waiver regarding two business rules regarding advanced payments for services, according to the Office of Management and Budget.

An OMB memo released today clarifies the allowances surrounding intragovernmental business transactions. The U.S. Chief Financial Officers Council is reviewing expansion of the rules to cover other intragovernmental activities that a 2002 OMB memo did not address.

The 2002 memo ruled that advance payments were not allowed for services unless explicitly required by law. Progress and periodic payments, however, were permissible. Advance payments were allowed for product orders exceeding $1 million, but the payment could not be more than half the order amount. Unless explicitly stated in the law, no advances were allowed for orders worth less than $1 million, the memo states.

These business rules have unintentionally caused confusion, particularly with reimbursable activity based on certain legislation and interagency funding of joint projects, according to the memo. The document states that agencies should follow OMB Circular A-11.

“Standardizing such processes will…place the federal government one step closer to achieving our goal of a clean opinion on the U.S. Consolidated Financial Statements by addressing this governmentwide material weakness,” the memo states.

In October 2002, OMB released memo M-03-01, which laid out standard business rules that did not address intergovernmental activities.

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