CHAPTER 6
FINANCIAL MANAGEMENT
The financial management procedures include the
operating target (OPTAR) accounting, inventory
accounting, and cost accounting. You will be required
to know this information when you are assigned as a
supervisor in a squadron material control, stock control,
or aviation support division (ASD)/supply support
center (SSC). In squadron material control, you, as the
supervisor, are responsible for managing the OPTAR
and submitting the required reports. In the stock control
or ASD/SSC of a supply department, you will be
involved with inventory and cost accounting (directly
or indirectly). This chapter will help you understand
the requirements, responsibilities, and supervisory
checks needed for proper financial management.
ACCOUNTING CLASSIFICATIONS
The list of accounting classifications and their
purpose is described in detail in the Defense Finance
Accounting Service-Cleveland, (DFAS-CL) Manual,
(NAVSO P) 1000.2M. The accounting classifications
are as follows:
Appropriation or fund-Expenditures in the Navy
are primarily classified by appropriation or fund; that
is, according to the legal source of the finds chargeable.
This accounting classification is described in chapter 2
of DFAS-CL (NAVSO P) 1000.2M.
Generally, appropriations and funds are
apportioned to the Navy and then subdivided to other
levels of Navy and Marine Corps organizations. The
appropriations and funds are made available at the
operating level by means of allotments or in some cases
suballotments. These accounting classifications are
described in chapter 3 of DFAS-CL (NAVSO P)
1000.2M.
Functional accounts—To prepare functional
reports with prescribed details of analysis under the
fund level, functional accounts are established for
identification of the required details. This type of
classification is covered in chapter 4 of DFAS-CL
Manual, (NAVSO P) 1000.2M. Some functional
accounts need to be identified to the appropriate
activity. The unit identification codes (UICs) are
assigned to identify the activities. The UICs are listed
in chapter 5 of the Navy Comptroller (NAVCOMPT)
Manual, Volume 2.
Object class-Under each appropriation, expendi-
tures are also classified by object class; that is, the kind
of item being obtained by the expenditure, However,
the object class is not actually shown on some
documents because it can be obtained from other
information appearing on the documents. This type of
classification is covered in chapter 6 of DFAS-CL
Manual, (NAVSO P) 1000.2M.
APPROPRIATIONS
The funds authorized by Congress for use by
different departments of the government are segregated
into broad categories as indicated by the appropriation
account. These categories are called the appropriations.
Appropriations are made from the general fund by
Congress to be expended in connection with the
operation of the Navy. These appropriations are made
for specific purposes and cannot be expended for other
than the purpose stipulated. The purpose of segregating
by appropriations is to channel the funds to the
commands responsible for their administration.
BUDGET ACTIVITY
The appropriations are divided into smaller
accounts for various purposes. These divisions are
called budget activities and the accounting symbols that
identify them are called subheads. Budget activity
accounts are established within each appropriation
account to record financial transactions. These are the
transactions relating to the specific functions contained
in the budget as approved by Congress. Budget activity
accounts are used primarily for administration,
accounting, and control.
BUREAU CONTROL NUMBERS
A bureau control number is an allotment
authorization number consisting of five digits. It is
made up of a 3-digit allotment number prefixed by a
2-digit budget project number. The bureau control
number identifies the activity or ship to which the
3-digit allotment was granted together with the
6-1
