Annual Appropriations Annual  appropriations  generally  cover  the  current operating  and  maintenance  expenses  of  the  Navy.  They become available at the beginning of the fiscal year stated  in  the  appropriation  act.  From  that  time  on throughout  the  fiscal  year,  they  maybe  either  directly expended or obligated An obligation occurs when an order is placed by an afloat unit or material is issued to an ashore activity, or similar transactions during a given period  that  requires  future  payments. After the end of the fiscal year, the Navy must return any unobligated balance to the Treasury. Obligated funds remain available for an additional 2 years. At the end   of   the   additional   2-year   period,   the   balance remaining  in  the  account.  They  are  transferred  to  the successor  “M”  account. These   funds   represent unliquidated  obligations  less  reimbursement  to  be collected.  The  successor  “M  account  is  available  for disbursement  of  appropriated  funds. Continuing Appropriations An   appropriation   is   available   for   incurring obligations  until  the  appropriation  is  exhausted  or  until the purpose for which the appropriation was made is accomplished.  An  appropriation  without  restriction  to a freed period is called a continuing appropriation or a no-  year  appropriation. Examples  of  continuing appropriations  are  Military  Construction  Navy  and revolving funds such as the Defense Business Operating Fund. Continuing appropriations become available for obligation and expenditure at the beginning of the fiscal year following the passage of the appropriation act. They may become immediately available if specified in the act. When the purpose of a continuing appropriation has  been  accomplished,  the  balance  equal  to  the  total  of unliquidated   obligations,   less   the   total   of reimbursements to be collected, is transferred to the successor  “M”  account.  Any  remaining  unobligated balance is transferred to the surplus of the Treasury. Multiple-Year  Appropriations Multiple-year  appropriations  are  generally  made for  purposes  which  require  long  lead  time  of  planning and  execution  such  as  procurement  of  Aircraft  and Missiles Navy and Shipbuilding and Conversion Navy. Multiple-year  appropriations  become  available  for obligation and expenditure at the beginning of the fiscal year   designated   in   the   appropriation   act   unless otherwise  stated  in  the  act.  They  are  available  for incurring  obligations  only  during  the  fiscal  years specified  in  the  act.  However,  they  are  available  for  the payment  of  such  obligations  for  an  additional  2  years thereafter. At the end of the last fiscal year included in the appropriation,  the  appropriation  expires  for  obligation purposes.  The  unobligated  balance  is  transferred  to  the surplus  of  the  Treasury.  At  the  end  of  the  2  years following  the  expiration  of  obligation  availability,  the balance   remaining   in   the   account,   representing unliquidated obligations less reimbursements to be collected,  is  transferred  to  the  successor  “M”  account. STATUS OF APPROPRIATIONS Three terms are used to designate the status of appropriations. CURRENT APPROPRIATION-An appropriation which is available for incurring obligations during the current fiscal year. EXPIRED   APPROPRIATION—An   appropriation that is no longer available for incurring obligations. It does  remains  available  to  liquidate  existing  obligations. LAPSED  APPROPRIATION—The  undisbursed balance of an appropriation. It is no longer available for disbursement by the department is called a lapsed appropriation. By way of explanation, let us follow an annual appropriation  for  Fiscal  Year  1996  through  the  above terms. Current   appropriation   1   October   1995   to   30 September  1996.  Available  for  obligation  and disbursement.  At  the  end  of  the  fiscal  year  (30 September   1996)   the   Navy   must   return   the unobligated  balance  to  the  Treasury. Expired   appropriation   1   October   1995   to   30 September  1997.  No  new  obligations  may  be incurred. The obligated balance is retained and disbursements  made  to  liquidate  the  obligations. Lapsed  appropriation  1  October  1997.  No  further disbursements  may  be  made.  The  balance  of outstanding  unliquidated  obligations  remaining  is transferred   to   a   successor   account   which   is available  indefinately  for  payment  of  obligations still  outstanding. 9-2