DoD Financial Management Regulation Volume 13, Appendix B

DoD Financial Management Regulation Volume 13, Appendix B

APPENDIX B

ACCOUNTING PROCEDURES FOR AIR FORCE NONAPPROPRIATED FUNDS

This appendix of the DoD FinancialManagement Regulation is for use by allnonappropriated fund accounting offices whichuse systems developed by the Department of theAir Force. The appendix contains policies andprocedures specific to those systems. General ornon-system-specific policies and procedures areincluded in the core regulation and have beenexcluded from this appendix. For example, therequirement that nonappropriated fundinstrumentalities (NAFIs) conform to generallyaccepted accounting principles is not system-specific and applies to all DoD NAFIs.Therefore, it is included in the core regulationand excluded from this appendix.

This appendix supersedes all previouslypublished policies and procedures, in the eventof conflicting instructions, the policies andprocedures in the regulation itself should befollowed.

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Volume 13, Appendix B DoD Financial Management Regulation

CHAPTER 1

PRINCIPLES, STANDARDS, AND REQUIREMENTS

B0101 Accounting Entity. The NAFAccounting Office (NAF AO) summarizesfinancial accounting results in terms of theentities that conduct the operation.

A. NAFI. Consider each NAFI(established according to AFI 34-201, Use ofFunds) a separate entity for accounting purposes.Maintain asset, liability, and equity accounts atthe NAFI-level. Use subsidiary records to reflectthe location within the NAFI where the assetsare used.

B. NAFI Subdivisions. NAFIsconsist of one or more subdivisions called costcenters. Do not confuse the accounting term"cost center" with the operational term "activity."Group financial transactions relating to oneoperational activity (e.g., an NCO club) into oneor more cost centers (e.g., bar, restaurant, snackbar, etc.). See AFMAN 34-214 for standard costcenter codes and descriptions. These codes areused for accounting purposes only. They do notimply any organizational or operationalrelationship. Changes or additions to thesecodes must be approved by AFSVA/SVF. Usean optional third digit to provide furthersubdivisions (if needed).

B0102 Document Flow and Control. Theactivity manager sends all accounting documentsto the NAF AO the next workday after thetransaction date. Off-base sites submitaccounting documents to the servicing NAF AOusing a prearranged schedule.

B0103 General Ledger. The NAF AOmaintains a separate general ledger for eachNAFI. Air Force NAFs use a uniform generalledger chart of accounts to summarize NAFIbusiness transactions.

A. General Ledger AccountCodes (GLAC). AFSVA/SVF develops andassigns standard three-digit GLACs to identifygeneral ledger and balance sheet accounts.

Changes or additions to these codes must beapproved by AFSVA/SVF. The NAF AO usesan optional fourth digit to provide increaseddetail data within the guidelines of each GLACdescription. See AFMAN 34-214 for GLACs anddescriptions.

B. A u t h o r i z e d C h a n g e s .Changes to requests to combine history balancesof individual accounts must be approved byAFSVA/SVF.

C. General Ledger Maintenance.The NAF AO maintains the general ledgers andprepares the financial statements. They posttransactions to the general ledger each workday.Before publishing financial statements, the NAFAO:

1. Includes informationfrom other systems, such as Point of Sales (POS)systems, into the NAF accounting system.

2. Prepares adjusting andclosing entries.

3. Updates financial records.

4. Reconciles subsidiaryrecords to general ledger control accounts.

D. Final Processing. The RMFCdesignates a central control point to compile alldata for final processing. Before publishing thefinancial statements, the RMFC ensures that theNAF AO accomplishes the items listed inparagraph B0103.C.

E. Subsidiary Records. The NAFAO keeps subsidiary records on balance sheetaccounts. Reconcile the balances in thesesubsidiaries to the general ledger controlaccounts before preparing the financialstatement. Automate the subsidiary recordswhere possible. If the subsidiary records are notin balance to the general ledger control accounts,

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the RMFC annotates the financial statementbefore releasing to external users.

B0104 Nonappropriated Fund StandardAccounting Management System (NAFSAMS).AFSVA maintains the standard Air Forceaccounting system. They provide centralizedsoftware development, maintenance, andsupport. AFSVA releases software updates andis the single organization authorized to changeAir Force standard software.

B0105 Interim Financial Statements. TheNAF AO prepares reports monthly and providesthe information to SV management. SVmanagement uses the interim financial statementto assess each operation’s current performance.SV management uses the interim financialstatements to plan for the future.

A. Adjusting Entries. The NAFAO posts required adjusting entries beforecompleting interim reports. Refer to AFMAN34-214. Establish and use a checklist for allrequired adjusting entries and automatedprocessing. Document and explain adjustmentsto the general ledger on AF Form 2541, NAFJournal Voucher. Number and control journalvouchers (JV) by NAFI. Enter the JV number onthe transaction to provide an adequate audittrail. The RMFC or designee (e.g., officemanager) approves AF Forms 2541. Beforeapproving, ensure that the NAF AO correctlyprepared the entries and that explanations orbackup documents have sufficient detail.

B. Finalizing the FinancialStatement. After the NAF AO posts alltransactions to the G/L for the currentaccounting period, the NAF AO:

1. Prepares a preliminarytrial balance.

2. Reconciles all subsidiaryrecords.

3. Makes any necessaryadjustments.

4. Prepares the final interimtrial balance before the final closeout.

5. Maintains the original trialbalance.

6. Provides each managerand the Nonappropriated Fund Financial Analyst(NAFFA) with a copy (or a copy of the interimfinancial statement).

C. Financial Statements. TheNAF AO prepares a final financial statement foreach NAFI at the end of each accounting periodafter they have produced and reconciled the trialbalance.

B0106 Fund Equity. The RMFC limitstransactions into and out of equity to:

A. Net income.

B. Net losses.

C. Approved prior yearadjustments.

D. Entries associated with theestablishment, disestablishment, distribution, orredistribution of capital (see AFMAN 34-214).

B0107 Fund Equity Adjustments. DFASapproves request to make adjustments to fundequity. The RMFC submits requests for prioryear fund equity adjustments through theMAJCOM, AFSVA/SVF, and AF/SVF to DFAS.The NAF AO records the transaction only afterDFAS grants approval. Footnote the financialstatement with the adjustment. Refer to AFMAN34-214 for additional details.

B0108 Reserving Fund Equity. TheNAF AO establishes the following ReservedEquity accounts for each NAFI:

A. Reserved Equity-CurrentPurchases. At the end of each accountingperiod, adjust this account to reflect the totalvalue of all outstanding orders which have notyet been received. Include outstanding ordersfrom all obligation documents, such asoutstanding purchase orders, blanket purchaseagreement (BPA) orders, and purchase requestsfor goods and services, including fixed assets onorder.

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B. Reserved Equity-CapitalRequirements. During the month of Septemberfor each fiscal year, close the current dollaramount in the reserved equity to FundEquity-Prior Year and set up the dollar amountfor the next fiscal year. As of 30 September thisaccount should reflect one fiscal year ofproposed capital requirements (for example 30September 1993 would reflect a balance for FY94). At any other time during the year, thebalance reflects the amounts approved but notyet obligated for the current FY. The NAF AOposts a change to this account when:

1. The NRB changes (partI that deals with capital assets).

2. An activity orders acapital item.

3. The fiscal year closes.

a. At the close of thefiscal year, the NAF AO reduces the currentbalance to zero and establishes the amount forthe next fiscal year based on Part I of the NRB.

(1) Base- levelNAFIs record only that portion of their NRB thatthe base will fund.

(2) M A J C O M srecord the dollar value of approved grants forNRB items which have not yet been paid. TheMAJCOMs adjust these amounts as they transferportions of these grants to base level.

C. Reserved Equity-Quantity(Bulk) Expendable Equipment. During themonth of September for each fiscal year (FY),close the current dollar amount in this reserveequity account to Fund Equity - Prior Year andset up the dollar amount for the next fiscal year.As of 30 September, this account should reflectone year of proposed quantity purchases ofexpendable items (part II of the NRB) (forexample 30 September 93 would reflect a balancefor FY 94). At any other time during the year,the balance reflects the amounts approved butnot yet obligated for the current FY. The NAFAO posts a change to this account when:

1. The NRB changes (partII that deals with bulk purchases).

2. An activity orders acapital item.

3. The fiscal year closes.Follow the guidance in paragraph B0108.B.

B0109 Income. Record income whenearned. Record to the benefitting cost center, ifpractical and identifiable. Income collectedbefore the accounting period in which it isearned is recorded as a liability. Transfer theliability to income in the period in which it isearned.

B0110 Expenses. Record expenses whenincurred. Record expenses to the cost centerincurring the expense, if practical andidentifiable.

A. Certain expenses, such asgeneral advertising, depreciation on equipmentfor general purpose use, and accounting supportservice charge, are "overhead" expenses. TheNAF AO posts these expenses to fundadministration as defined in the cost center codesfor A1-A9. Do not prorate those overheadexpenses to other activities (except CCC A9 andcertain marketing expenses as defined in CCCA5). Do not record identifiable activityoperating expenses into the NAFI’s fundadministration cost center.

B. Transfer merchandise ,supplies, or services between activities at cost.

B0111 Grants. The NAF AO posts grantsaccording to AFMAN 34-214.

B0112 Extraordinary Items. DFAS mustgive advance approval to record any transactionas an extraordinary gain or loss. The RMFCsubmits requests through the MAJCOM,AFSVA/SVF, and AF/SVF. The NAF AO doesnot post the transaction until DFAS gives writtenapproval. Attach a footnote to the financialstatements to explain the cause of the transactionand the effect it has on current operations.

B0113 Contingencies. Contingencies are

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existing conditions, situations, or circumstancesinvolving uncertainty as to possible gain or loss.The NAFI ultimately resolves contingencieswhen one or more future events occur or fail tooccur. The RMFC works with SV managementto determine the amount of the loss contingency.The NAF AO post accruals for loss contingencieswhere the outcome is probable and the amountis reasonably estimable. Do not record gaincontingencies. When SV management identifiesa contingency, the NAF AO footnotes thefinancial statements explaining the contingencyand the potential for gain or loss.

B0114 Assessments. The NAF AO postsAir Force assessments to the activity beingassessed.B0115 Command Lodging Fund (CLF)Procedures. The NAF AO posts transfers of cashfrom the CLFs to base lodging funds and viceversa as transferred equity.

B0116 Morale, Welfare, and Recreation FundTransfers. The NAF AO posts base or MAJCOMavailable cash transfers as transferred equity.When Air Force returns cash to the base orMAJCOM, each level records it as transferredequity.

B0117 Accounting in Small NAFIs. TheNAF AO maintains NAF accounting records onthe accrual basis of accounting, except as shownbelow.

A. The IUF maintains accountingrecords on a cash basis if total revenue is lessthan $36,500 per year, and authorization isreceived from MAJCOMs.

B. Small NAFIs that lack localaccounting support, or those with limitedprograms such as MAJCOM or remote siteNAFIs, may not need all of the detailedaccounting records and procedures required bylarger NAFIs.

C. Small NAFIs may use thecash receipts journal, check register, andadjusting, closing, and reversing journals, andother general purpose journals as required tosupport their financial statements.

B0118 Major Command (MAJCOM)Supplements.

A. MAJCOMs may supplementthis instruction. AFSVA/SVF through DFASapproves drafts of command supplements to thisinstruction before publication. The MAJCOMsfurnish a copy of the final publication to HQAFSVA/SVF.

B. BRFs or CWFs. Coordinatecommand supplements involving BRFs or CWFswith the BOD AAFCWF before submitting toAFSVA/SVF. Send one copy of each approvedcommand supplement involving BRF or CWF tothe BOD AAFCWF.

B0119 Requests for Technical Assistance orWaiver. Submit requests for clarification orinterpretation of this instruction through theMAJCOM/SVF or field operating agency (FOA),HQ AFSVA/SVF to DFAS. Submit each requestfor waiver, except those waivers authorized andgranted locally according to AFI 34-201, throughthe MAJCOM/SVF or FOA to HQ AFSVA/SVF.Waivers granted according to AFI 34-201 mustbe approved by the installation commanderthrough the custodian, SV commander ordirector, as applicable. MAJCOMs submit theirrequests for waiver concerning BRFs and CWFsto HQ AFSVA/SVF through the BOD AAFCWF,21 Army Pentagon, Washington DC 20310-0021.In the request for waiver, outline the problem,identify the specific requirement to be waived,recommend an alternative, and furnish completejustification. Waivers to this AFI have no effectwithout a control number assigned by theapproving authority.

A. Review waivers, at leastannually or when conditions and circumstanceschange.

B. Waivers are valid for a periodnot to exceed 3 years. At the end of the 3-yearperiod, reevaluate waivers through thecustodian, SV commander or director, MAJCOM,FOA, or HQ AFSVA/SVF, as appropriate.

C. All waivers in effect before thedate of this AFI are void and must bereaccomplished.

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B0120. Forms. AFSVA/SVF approvesrequest for changes to Air Force forms. SV mayautomate the AF and NAF forms if form contentand requirement do not change.

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CHAPTER 2

EXEMPT NAFIS

B0201 USAF Academy (USAFA) AthleticAssociation (USAFAAA). The USAFA Directorof Services (HQ USAFA/SV) establishes andmaintains the standard NAF accounting systemaccording to Air Force directives. The USAFAAfollows standard Air Force NAF accountinginstructions to ensure consistency with generallyaccepted accounting principles and standards.

A. Fiscal Year (FY). TheUSAFAAA’s FY is from 1 July through 30 June.

B. Reporting Requirements. TheUSAFAAA is exempt from reportingrequirements specified in chapter 10 of thisregulation.

C. Annual SVF Financial Report.The USAFAAA provides financial data toAFSVA/SVQ. AFSVA/SVQ includes theinformation in the annual MWR FinancialReport, RCS: DD-M(A)1344.

B0202 USAFA Cadet Dining Hall NAFI.

A. Authority. This NAFI isestablished under the authority of DODInstruction (DODI) 1338.17.

B. The NAF AO uses AFI 34-209,AFMAN 34-214, and AFMAN 34-215 to accountfor the cadet dining halls. When these directivesconflict with DODI 1338.17, the requirements inDODI 1338.17 take precedence.

C. The fund is exempt fromreporting requirements specified in chapter 10 ofthis appendix.

D. Reporting requirements.

1. The NAF AO uses reportformats and preparation instructions found inDODI 1338.17 attachments. Prepare the report inthree parts.

2. Reporting requirements

are assigned RCS: DD-COMP(A)1291.

E. The commandant of cadets, ordesignee, coordinates this report with theUSAFA Director of Financial Management andComptroller and the USAFA Director of Services.The commandant of cadets sends thecoordinated report to the Assistant Secretary ofDefense (Comptroller), ATTN: Directorate ofMilitary Personnel. Send this report not laterthan 90 days after the end of the FY.

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CHAPTER 3

PROPERTY

B0301 Property. The NAF AO maintainsaccounting records and updates the subsidiaryaccount for NAF property transactions. Thisincludes:(1) Maintaining property records on all fixedassets;(2) Process payments to vendors; (3) Preparingasset lists for inventory purposes.

A. Non-reimbursable, Inter andIntra NAFI Transfers. Any activity that transfersproperty completes AF Form 2534, NAF PropertyDisposal/ Transfer Receipt. Authorizedapproval required by AFI 34-201 is adequatesupporting documentation. The NAF AOreceives the AF Form 2534 and posts thetransaction according to AFMAN 34-214.

B0302 Defense Reutilization andMarketing Office (DRMO) Property. The NAFAO capitalizes acquisition costs of $1,000 ormore for DRMO property. The property musthave a useful life of two or more years. SeeAFMAN 34-214 for detailed procedures.

B0303 Leases. The NAF AO posts leasesas either capital leases or operating leases. Usethe criteria in AFMAN 34-214 to decide if leasesare capital or operating. Amortize capital leasesover the life of the assets. Post other leases asoperating leases. Post rental expense whenpayment is made. See AFMAN 34-214 fordetailed procedures.

B0304 Repair of Fixed Assets. The NAFAO capitalizesrepair of a fixed asset when the repair costs$1,000 or more. The repair must extend theuseful life of the asset 2 years or more. If therepair does not qualify, post the cost as anexpense. See AFMAN 34-214.

A. Equipment. Use the sameproperty number with an alpha code A, B, C,etc., for the number of repairs. When theactivity disposes of the property, the NAF AO

writes off the related repairs.

B. Renovations. The NAF AOwrites off the undepreciated value of previousrenovations when new renovations completelychange the previous one. Write off relatedrenovations when an activity disposes of afacility.

B0305 Depreciation. The activitymanager assigns the projected life for a fixedasset based on the depreciation tables inAFMAN 34-214. The RMFC helps the activitymanager to determine the projected life. TheRMFC and the civil engineers establish facilitydepreciation periods according to thedepreciation table in AFMAN 34-214.

A. See AFMAN 34-214 forprocedures on computing depreciation. TheNAF AO posts depreciation expense to the costcenter where the property is actually used. Donot charge depreciation expense to anadministrative cost center code except wheneither situation applies:

1. The operation’s businessoffice physically uses the property.

2. More than one costcenter uses the property. An example is ageneral purpose vehicle used by several costcenters in a club.

B. The applicable activitymanager determines whether or not fixed assetshave a salvage value. The RMFC, DRMO, andthe SCO help to determine the salvage value.The NAF AO uses these values to determine thedepreciable value.

C. The NAF AO continues topost depreciation expense for NAF capital assetstransferred to APF records until the items arefully depreciated. Post the depreciation expensein the transferring activity’s cost center.

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B0306 Master Property Record Changes.The activity manager prepares an AF Form 2534to physically move property items between costcenters or to dispose of property by any method.Forward the completed form to the NAF AO.The NAF AO processes the transfer in theaccounting records.

B0307 Trade-In of Assets. The NAF AOposts the disposition of the old asset using thenormal process. Post the newly-acquired asset atits full cost (before trade-in). When the trade-invalue does not equal book value for the disposedasset, post the gain or loss in the disposed assetaccount.

B0308 Disposition of Assets. The NAFAO posts disposals of assets in the accountingsystem. Post any gain or loss resulting from thedisposal on the financial statement. Use thisprocedure for all assets including those acquiredby transfer or donation. See AFMAN 34-214 fordetailed procedures.

B0309 Acquisition of Expendable Items.Expendable items do not meet fixed assetrequirements. See AFMAN 34-214 for detailedprocedures on acquisition of expendable items.

B0310 Government Surplus Aircraft. TheNAF AO capitalizes initial repair costs to makegovernment surplus aircraft air worthy. Therepair must cost $1000 or more. It must have auseful life of two years or more. If it does notmeet this criteria, post the repair cost as anexpense.

B0311 Government Surplus AircraftEngines. The NAF AO depreciates an aircraftengine only when the old unit is removed fromthe aircraft and replaced by a rebuilt or newengine. Depreciate the replacement engine onlyuntil the first overhaul is due or for a maximumuseful life of three years.

B0312 Claims. AFSVA settles claims forinsured assets that are destroyed or damaged.Once AFSVA settles the claim, the NAF AOadjusts the affected accounts. Usually claimsettlements do not exceed the acquisition valueless accumulated depreciation of the propertydestroyed (book value).

B0313 BRF/CWF. For acquisitions ordisposal of assets belonging to a Base RestaurantFund or Base Civilian Welfare Fund, see AFJI 34-122.

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CHAPTER 4

REVENUE TRANSACTIONS

B0401 Revenue Processing. Activities useAF Form 1875, NAF Individual Cashier’s Report(ICR), to provide accountability for individualcashiers. Activities use AF Form 1876, NAFConsolidated Cost Center Report (CCCR), or thedaily cash reconciliation report (for lodgingoperations) to report deposits and consolidatedincome to the NAF AO. Activity managerscontrol ICRs and CCCRs according to AFI 34-202, Protection of Assets. The NAF AOsubsequently uses the AF Form 1876 to enterinformation into the financial records. AFMAN34-214 contains detailed accounting procedures.

B0402 Service Charge Procedures forLodging Funds. When TLFs charge severaldifferent rates, the NAF AO uses fourth-digitshredouts of the appropriate revenue GLAC toaccount for each rate within the TLF cost center.

B0403 Monte Carlo Night. The NAF AOaccounts for Monte Carlo as a resale operation.

B0404 Quality Recycling Program (QRP).The NAF AO posts income and expenses to theQRP cost center. AFMAN 34-214 containsdetailed accounting procedures.

B0405 Interest. AFSVA/SVF determinesthe interest rate paid on all cash within theCMIP and the amount of any end-of-yeardividend. The NAF AO posts interest income inthe applicable NAFI’s administrative cost centercode.

B0406 AAFES Simplified Dividend. TheNAF AO does not accrue for distributions asthey are made on a current basis. AFMAN 34-214 contains detailed accounting procedures.

B0407 Operating Subsidies. The NAFAO posts subsidies from foreign governments asnonoperating income in the applicable costcenter. Post the associated expense to theapplicable cost center.

B0408 Foreign Currency. NAF activitiesinvolved in accommodation exchange servicesbuy foreign currency for resale at the wholesalerate established by the contracted militarybanking facilities (MBF) overseas. AFMAN 34-214 explains the computation.

B0409 Commercial Sponsorship Program.The NAF AO posts the sponsorship in theactivity identified by the vendor. Use theadministrative CCC of that activity ifappropriate. If the vendor does not specify anactivity, record the sponsorship in the NAFIsadministrative CCC.

B0410 Randolph Sheppard Act-VendingFacility Program for the Blind. The NAF AOposts the NAFI’s proceeds from vendingmachines as revenue in the applicable costcenter. Show the payment to agencies for theblind as expenses in those cost centers. Useapplicable GLACs to record these expenses.

B0411 Slot Machine. The NAF AO postsslot machine income and expenses in the activityhaving the slot machines. Use cost center codesA9, G5, W5, X5, Y5 and Z5 to record transactionsinvolving slot machine revenue and expenses.See the guidelines in AFMAN 34-214.

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CHAPTER 5

ACCOUNTS RECEIVABLE

B0501 Internal Accounts Receivable(A/R) Processing. The NAF AO maintains A/Rsubsidiaries except for lodging funds. The NCR9300 User’s Manual contains instructions forprocessing A/R. AFMAN 34-214 contains otherA/R procedures. If problems arise in balancingthe general ledger control accounts to subsidiaryrecords, the RMFC or designee assists inreconciliation. If the NAF AO identifiesvariances but cannot correct them prior topublishing financial statements, the NAF AOfootnotes the financial statements.

B0502 A/R Function Located Outside theNAF AO. AFSVA/SVF approves requests tolocate the A/R function outside the NAF AO.The RMFC prepares an A/R operatinginstruction (OI) for each approved operation.Include instructions to ensure:

A. The operating locationreconciles the subsidiary record to the controlaccount, as a minimum, before preparing thefinancial statement.

B. The operating locationprepares a proper aging of accounts receivable.

B0503 A/R Operating Instruction. TheRMFC develops an OI to provide guidance onmonitoring A/R. Include guidance on:

A. Follow-up actions.

B. Account write-offs.

C. Procedures to prevent fraudby collusion (more than one person workingtogether to cause the fraud).

B0504 Billing Cutoff Date. Activitymanagers and the RMFC attempt to establish abilling cutoff date other than the end of themonth. Do not make the cutoff date earlier than

the 16th of the month. Ensure this datecoincides for all clubs serviced by the NAF AO.The NAF AO posts dues for the current month,regardless of cutoff date, as of the 15th of themonth (after posting all daily business for the15th). Customers may pay dues and fees inadvance. See AFMAN 34-214 for details.

B0505 Minimum or Maximum PurchaseRequirement for Extension of Internal Credit.The SV commander or director approvesminimum or maximum amounts that a customermay charge on internal credit.

B0506 Scope of Credit. Members of clubsmay use their membership cards in any MWRfund activity. See AFMAN 34-214 for detailedA/R procedures.

B0507 Organizational Credit. The SVcommander or director may authorize officialorganizations to purchase through an opencharge account from NAFIs. The NAF AO keepswritten authorization (includes project officer’sname and number) on file.

B0508 Late Payment Charge. TheMAJCOM/SV may authorize a late paymentcharge on member accounts. Do not authorizemore than $20 for any one delinquent cycle (60and 90 days). The NAF AO posts late paymentcharges as non-operating revenue to the NAFAO cost center to offset costs of collectingdelinquent accounts. Do not charge more than$40 for the entire delinquency period. SeeAFMAN 34-214.

B0509 Reversal of Dues Incorrectly Charged.The NAF AO prepares the list with back-up

documentation to request dues adjustments. Ifthe NAF AO does not maintain the A/Rsubsidiary records, the activity manager of theoperating location submits the list and back-updocumentation to the RMFC. The RMFCapproves any dues adjustments. Once approved,

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the NAF AO processes the adjustment. Seeparagraph B0511 for procedures to write-offvalid uncollectible accounts.

B0510 Collection Actions. The NAF AOperforms collection actions except where waived.This does not prevent activity managers fromhelping the NAF AO collect delinquent A/R.

A. The NAF AO:

1. Processes collectionactions according to AFI 34-202.

2. Maintains, controls andreports delinquent accounts and returnedchecks on AF Form 1708, NAF DishonoredCheck Control Log.

3. Documents follow-upactions.

B. The NAF AO does not delaythe minimum followup actions required inAFMAN 34-214. The installation commanderapproves requests to shorten the time-frame inAFMAN 34-214.

B0511 Bad Debt Write Off Procedures. Ifthe followup procedures prescribed in paragraphB0510 and AFMAN 34-214 are not successful, theRMFC begins write-off procedures as stated inAFI 34-202. The NAF AO posts the bad debtwrite-off to the applicable activity’sadministrative cost center.

B0512 Commercial Debt CollectionContracts. RMFCs use the Air ForceNonappropriated Fund Purchasing Office(AFNAFPO) procured commercial debt collectioncontract to collect past due accounts, returnedchecks, and other debts owed to Air ForceNAFIs. Use the contract for individuals wherepayment cannot be recover through DD Forms139, Military Pay Order, or APF/NAF payrollsystems. See AFI 34-202. When an account issent to the collection agency, the NAF AO writesit off the financial statements. Use the applicablecost center to record the bad debt write off.

B0513 Reinstatement of Membership

Privileges. The SV commander or directorapproves requests for reinstatement ofmembership privileges (see AFMAN 34-214).

B0514 A/R Aging and Reporting. TheNAF AO prepares and reports aged A/R for allNAFIs and activities authorized internal creditsystems. When a location outside the NAF AOmaintains the A/R subsidiary records, theactivity manager furnishes an aged A/R reportto the NAF AO.

B0515 Dues Cutoff for DelinquentAccounts. The NAF AO does not postmembership dues to a member’s account after 3months dues have been posted and remainunpaid. The NAF AO can only charge up tothree months’ unpaid dues in the followinginstances:

A. A member has an MPOpending.

B. A member turns in his or herclub card.

C. A member leaves the basewithout clearing the club.

B0516 Allowance for Uncollectible A/R.The NAF AO posts bad debt expense at the endof each accounting period. Post the estimatedvalue of uncollectible A/R. Use the applicableactivity’s administrative cost center. Record thissame amount in an allowance for uncollectibleA/R account. Base the estimate on the averagewrite-offs of A/R using historical data.

A. Do not establish an allowancefor uncollectibles that exceeds 1 percent of theA/R for the current period. If the estimate ofaverage write-offs is greater than 1 percent,review collection procedures to ensure they aresufficient and timely.

B. The NAF AO reduces theallowance for uncollectibles account when anactual account is written-off. If the write-offreduces the allowance for A/R account to zero,expense any remaining amount in the currentaccounting period.

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B0517 Allowance for UncollectibleReturned Checks. If the amount of write-offs isnot significant, the NAF AO may post theexpense at the time of write-off. If historyindicates significant amounts written-off,establish an accrual according to paragraph 7.18.

B0518 Accounts with Credit Balances.The NAF AO reviews accounts with creditbalances at the end of each accounting period.If the credit balances exceed five percent of totalA/R due, the NAF AO posts this amount in anunearned income liability account. Reverse theentry the following month. If the credit balancesare less than five percent of the receivables, netthem in the A/R asset account.

B0519 Lodging A/R.

A. Lodging personnel sendstatements to TDY personnel on the last day ofthe month for:

1. Visiting officers’ quarters(VOQ).

2. Visiting airmen quarters(VAQ).

3. Temporary lodgingfacilities (TLF).

B. Send statements only ifpatrons used the quarters for 15 days or moreand the anticipated stay during the succeedingmonth exceeds 15 days (see AFMAN 34-214).

C. Collection actions required inAFI 34-202 remain the RMFC’s responsibility.Use the time-frame in AFMAN 34-214 tocomplete follow-up actions. The Innkeeperprocesses collection actions on accounts that are30 and 60 days delinquent. The RMFC ensuresthat the Innkeeper is performing collectionactions in a timely manner. Once accountsbecome 90 days delinquent, the RMFC assumesresponsibility for additional collection actions.

B0520 Returned Checks. For policy,follow-up, and collection procedures on returnedchecks, see AFI 34-202.

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CHAPTER 6

PURCHASE AND CONTROL OF MERCHANDISE

B0601 Partial Shipments. The activitydocuments receipt of partial shipments on a DDForm 250, Material Inspection and ReceivingReport. The activity completes the form andwrites "Partial Shipment" across the top of theform. Annotate the form with the originalpurchase order (PO) number. Complete thepartial receiving report with the item number,quantity received, and description of itemsreceived. Annotate the original PO to showitems received in a partial shipment, the datereceived, and the date the partial receivingreport was forwarded to the NAF AO.

B0602 Value Added Tax (VAT). UnderUnited States and Federal Republic of Germany(FRG) agreement, authorized personnel mayobtain exclusion from the German VAT if theymake their purchases through an official USgovernment contracting activity at USAF Europe(USAFE) installations. VAT offices are part ofthe MWR Fund. For currency conversion onVAT transactions, the NAF AO reimburses theMilitary Banking Facility (MBF) the differencebetween the bulk rate and the wholesale rate forits monthly VAT Deutsche Mark (DM)transactions. For procedures governingoperation of VAT offices see USAFE AFR 176-1.

B0603 Stock Records. The NAF AO usesthe NAFSAMS inventory system to maintainautomated stock records to track inventory orhighly sensitive items. Activities may use otherautomated systems to track in-house inventories.

A. The applicable activitymanager maintains stock record cards on alltransactions involving firearms. Report anydiscrepancies immediately to the RMFC.

B. When using stock recordcards, limit access to the cards. Secure recordsduring nonduty hours.

B0604 Stock Levels and Reorder Points.The activity manager and RMFC establish stocklevels and reorder points. The NAF AO mayinclude reorder points in the inventorysubsidiary.

B0605 Stock Numbers and StandardUnits of Measure. The NAF AO, with theassistance of the activity manager, assigns stocknumbers and standard units of measure tocontrol inventories on all resale, storeroommerchandise and supply items. Use consistentnumbers throughout all NAFIs. The activityannotates the stock numbers on AF Form 2533,NAF Transfer Between Cost Centers, or usesorder entry forms when transferringmerchandise for resale or promotion. See theNCR 9300 User’s Guide for the list of standardunits of measure and their abbreviations usedwhen processing inventory. Refer to AFMAN34-214 for additional details.

B0606 AF Form 2533, NAF TransferBetween Cost Centers (TBCC). The activitymanager or designee uses AF Form 2533 or anorder entry form to transfer goods or stockbetween cost centers. The activity manager ordesignee may consolidate work orders to oneTBCC (See AFMAN 34-214).

B0607 AF Form 1735, NAF InterfundPurchase Order (IPO). The activity manager ordesignee uses an AF Form 1735 or order entryform to order services or merchandise from otherNAFIs. The ordering activity manager processesand numbers IPOs or order entry registers. TheRMFC signs the IPO unless purchase authoritywas delegated to the ordering activity manager.The NAF AO processes the payment between theapplicable NAFIs, using AF Form 1804, NAFInterfund Dollar Transfer. Process the paymentnot later than the following month (See AFMAN34-214).

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B0608 Spoilage, Breakage, and Out-DatedMaterial. The activity manager determines theamount of spoilage or breakage by incident, notby individual line item. The NAF AO postsreported losses in the month of occurrence.AFMAN 34-214 contains accounting procedures.

B0609 Commodities. The activitymanager controls commodities received throughthe United States Department of Agriculture(USDA) Food Program. The requirements forordering, receiving, and controlling inventoryand payment vary from state to state. Theactivity manager, appropriate flight chief, andthe RMFC, decide the method of inventoryaccountability (See AFMAN 34-214).

B-15


CHAPTER 7

ACCOUNTS PAYABLE PROCESSING

B0701 Establishment of AccountsPayable. The NAF AO posts accounts payabletransactions when an activity has received goodsor services on credit. The NAF AO makespayment to the vendor to clear the accountspayable.

B0702 Documents and Entries. The NAFAO does not record an obligation unless ordersor agreements are in writing and supported bya receiving report (RR) or proof of shipment.Any activity using a POS system to maintainperpetual inventory enters receiving documentsinto the POS system before forwarding to theNAF AO. Activities using POS systems forwarddocuments to the NAF AO no more than twoworkdays after the receiving date.

B0703 Payable Suspense File. The NAFAO establishes a suspense file for all payables.The NAF AO sets the file up to ensure they payinvoices timely and to help reconcile thesubsidiary. The documents in this file make upthe subsidiary record of the general ledgercontrol account. The total should balance to theautomated accounts payable subsidiary and thegeneral ledger control account.After processing RRs through the payablesystem, file them in the suspense file formatching with invoices and making payment.

B0704 Proof of Shipment. The NAF AOmay need to pay vendors on shipment, ratherthan on receipt of goods. Review the contractterms to determine if the vendor requirespayment on shipment. See AFMAN 34-214 forguidance.

B0705 Vendor Invoices. The vendormails invoices directly to the NAF AO. Whenthe NAF AO receives the invoice, the RMFC mayprovide a copy of it to the activity manager. SeeAF Form 2210, General Provisions, for requiredinformation for a vendor to include on invoices.The NAF AO uses the invoice as part of the

documentation required for payment. Includevendor invoice numbers with the check to thevendor. See AFMAN 34-214 for overpaymentsand minor errors on invoices.

B0706 Discounts. The NAF AO postsdiscounts by reducing the cost of the itempurchased. Take all discounts to which you areentitled. The discount period begins with thedate of the contractor’s invoice. For the purposeof earning a discount, the day that the NAF AOissues the check is considered the payment date.To comply with the Prompt Payment Act, mailchecks to vendors on the same day they areissued.

B0707 Delivery Costs. The NAF AOposts freight costs to purchase expendableequipment, supplies, or resalable merchandise assupplies expense or cost of goods as appropriate.Include freight, postage, etc., as part of thepurchase price. Includefreight cost associated with capitalized items(fixed assets) as part of the acquisition cost of theasset.

B0708 Preparing Accounts Payable forPayment. The NAF AO matches vendor invoiceswith the receiving reports. The activity manageror designee certifies AF Forms 1735 used totransfer merchandise between NAFIs. Noinvoice is required for AF Forms 1735. Pay AFForms 1735 using interfund dollar transfers.

B0709 Documentation Required forPayment. The NAF AO usually requires threedocuments to substantiate payment to a vendor.They are: a contract, a receiving report, and avendor invoice. The following qualify as acontract: (1) Purchase order; (2) Blanketpurchase agreement (BPA), or a call or deliveryorder written against an NPA, etc.; (3) A singledocument that constitutes a contract.

A. When an Air Force agency or

B-16


a utility provides goods or services, the NAF AOdoes not receive a formal contract (for example,commercial telephone service or purchases fromthe commissary). The NAF AO uses thedocuments in this paragraph to supportpayment.

1. T h e N A F A Osubstantiates payments to government sourcesby their invoices and extended commissarysubsistence requests (AF Form 287, SubsistenceRequest).

2. The activity manager ordesignee certifies the government invoices andcommissary subsistence requests.

3. The designer certifiesinvoices for interior design contracts.

4. The lodging fund mayrequest customer refunds using SIMS checkrequests.

B. Use of AF Form 2539, NAFDisbursement Request. Use AF Form 2539instead of a purchase order, for items such as:

1. Loan payments.

2. Registration or entryfees.

3. NAF official travel.

4. Tax payments andInternal Revenue Service payments.

5. Workers’ compensationclaims.

6. Payments to othergovernment instrumentalities.

7. Payments against specialcontracts, interior design, commercial telephone,utilities, etc. See AFMAN 34-214 for entertainersand NAF official travel.

C. Blanket Purchase Agreements(BPA). The NAF AO should pay amounts due

vendors for calls placed against BPAs orinterfund purchases monthly. This does notapply to meat or meat food products. Pay formeat or meat food products according to thePrompt Payment Act. See AFMAN 34-214 forother requirements related to paying vendors onBPA.

D. Signature Authorization. TheRMFC or designee approves documentsauthorizing payments made from NAFs. TheRMFC designates signature authority in writing.File the authorization in the LOF.

E. Filing Paid Documents. TheNAF AO marks all backup documentation bystamping them paid after making disbursements.File one copy of the check, with all backupdocumentation, in the accounts payabledisbursements file. File these chronologically byvendor.

F. Centralized Payment ofConsolidated Purchases. AFSVA/SVFF paysvendors for AFNAFPO central buys andsubsequently withdraws the amount paid fromeach base’s CMIP account. See AFMAN 34-214for details.

B-17


CHAPTER 8

INVENTORY

B0801 Inventory Maintenance. Activitymanagers control inventories at all times toprevent loss due to spoilage, obsolescence, ortheft. The NAF AO maintains inventory recordsby updating the system with information fromaccounts payable, AF Forms 2533, or NCR orderentry forms. To ensure the general ledger andthe actual inventory contain the same data, theRMFC may establish a cutoff date for inventoryrelated documents (see AFMAN 34-214). Thetypes of inventories are:

A. Central storeroom. The NAFAO accounts for inventory maintained in acentral storeroom as an asset until the storeroomissues the inventory. Once the storeroom issuesthe inventory, the NAF AO posts the expense inthe applicable GLAC using the applicable CCC.

B. In-Use. Activities establishinventories for merchandise held for resale orconsumption in sales outlets.

C. Decentralized Storeroom.Activities establish decentralized storeroominventories as

1. Backup stock for in-useinventories.

2. High value or sensitive(such as POL and spare parts for aero club andslot machine operations) merchandise identifiedby management for additional control.

D. Consigned Merchandise. Theconsignor establishes consigned merchandiseinventory to control items received onconsignment. When consigned goods arereceived, the NAF AO does not post the receiptof, or any obligation for, the consigned items inthe financial records. AFMAN 34-214 containsadditional procedures.

E. Fixed Assets. The NAF AO

includes furniture, equipment, and facilities.Show this inventory as the appropriateaccounting type, APF or NAF. AFMAN 34-214contains additional procedures.

F. Inventory-In-Transit. TheNAF AO records items purchased but receivedby an agent outside the NAFI proper. When theNAFI receives the items, record in the correctaccounts.

B0802 Establishing Inventory DollarLevels. The SV commander or director approvesmaximum inventory levels for each cost center(See AFMAN 34-214).

B0803 Review of Storeroom and In UseInventories. Activity managers review allinventories and stock records to identify slowmoving items and dead stock at leastsemi-annually. The SV commander or directormay authorize below cost sales (not promotional)for slow moving or dead stock inventory items.

B0804 I n v e n t o r y S c h e d u l e a n dFrequency. Activity managers submit completedinventory count sheets to the NAF AO forextension. The NAF AO processes inventoriespromptly to obtain a dollar valuation of thephysical inventory for inclusion in the financialreports. The RMFC uses the physical inventoryto determine if variances exist and if analysis orinvestigation is required according to AFI 34-202.

A. Activities inventory all foodor beverage activities, pro shops, audio/photoand tickets monthly.

B. Activities inventory otherresale merchandise including centralized anddecentralized storerooms and merchandise onconsignment, as a minimum, at the end of eachquarter.

C. Activities inventory

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merchandise held for special events by type ofevent. Items include donations received fromcommercial sponsored occasions (see AFI 34-202).

D. Activities with firearmsinventories them monthly. The activitymanager accounts for firearms daily.

E. The SV commander or directormay allow any activity having a point-of-sale(POS) system that maintains perpetual inventoryto take only an annual physical inventory. As aminimum, an independent observation teammust observe the taking of the physicalinventory:

1. At the end of the FY.

2. On change of activitymanager (unless waived).

3. When spot checks by theNAFFA indicate an inventory problem.

4. When required by an AirForce Audit.

B0805 Change of Activity Managers.

A. The NAF AO furnishes fixedasset property listings to the activity managerswhen management changes. Incoming activitymanagers must satisfy themselves as to thecorrectness of the property records. To verifythe property records, the activity usuallyphysically inventories the property. Theincoming activity manager may waive thisrequirement. The NAF AO attaches the waiverto the change of custodian certificate (seeAFMAN 34-214 for details).

B. The incoming activitymanager also checks correctness of decentralizedstoreroom or in-use inventories. (See AFMAN34-214 for details).

B0806 Change of Custodian (RMFC).Change of custodian does not require a physicalinventory except for NAF AO assets. Transferinventories by exchanging receipts between the

outgoing and incoming RMFCs.

B0807 Decentralized Storeroom (AeroClub and Slots Operation). See AFMAN 34-214for decentralized inventories for Aero clubs andslot machines.

B0808 Free Items or Donations. Whenvendors provide free items as bonuses or apurchase discount, the receiver notes the freeitems on the receiving report. The NAF AOrecords free items on the inventory. If anactivity receives donations for special occasionsand gives them away, the activity manageraccounts for these items without having the NAFAO process them through the inventory and costof goods sold. The RMFC or designee examinesall transactions involving donations to ensurethat the activity manager accounts for the itemsreceived.

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CHAPTER 9

CHILD CARE

B0901 Reimbursement for Child CareFood Programs (CCFP). The NAF AO postsincome, accounts receivable and subsequentreimbursement for child development programparticipation in the USDA CCFP. The USDAadministers the program in all states andterritories through the state or regional office.Follow regional USDA policies for completionand reporting purposes.

A. Reimbursement Requests forContinental United States (CONUS) Bases. AtCONUS bases, the child development centerdirector or designee completes the requiredforms requesting reimbursements (using stateprovided forms). Send the requests to the NAFAO. The NAF AO reconciles the forms to thesubsidiary record and forwards them to thestate’s office for the USDA CCFP.

B. CCFP Sponsorship FamilyDay Care Providers. Air Force ChildDevelopment Centers (CDC) act as sponsors forfamily day care home providers participating inthe USDA CCFP.

C. U S D A , t h r o u g h t h esponsoring CCFP, reimburses family day careproviders for part of the costs of providingnutritional meals and snacks to the children.The NAF AO does not issue IRS Form 1099 forCCFP disbursements to family day careproviders for USDA reimbursements.

D. T h e C D C r e c e i v e scompensation from the USDA to administer theprogram. The CDC can use the funds receivedfrom USDA to hire staff to administer theprogram.

B0902 Accounting for Child Care Serviceto Volunteers. The CDC or authorized familyday care providers may provide child careservices for volunteers when the volunteers servethe Air Force community.

A. When the CDC provides childcare services to volunteers, refer to AFMAN 34-214 for accounting procedures.

B. The installation commandermay approve, in writing, a specific number offamily day care providers to care for children ofvolunteers when no space is available in theCDC. The NAF AO prepares a nonpersonalservice contract, in advance, with the provider tospecify the rate charged and other charges (forexample, food, diapers). The NAF AO providesthe day care provider an IRS Form 1099 at year-end according to IRS requirements. The NAFAO includes on the IRS Form 1099 the amountpaid to day care providers for volunteer care.Do not include amounts paid relating to USDAfood reimbursements.

B-20


CHAPTER 10

REPORTS

B1001 Temporary Lodging Facility (TLF)Assessment.

A. AFSVA/SVF advises the NAFAO of new or changed rates for assessmentcollection and reporting purposes.

B. The NAF AO computes theTLF assessment. Do not count or includevisiting officers’ quarters (VOQ) and visitingairmen’s quarters (VAQ) used for permanentchange of station (PCS) families unlessAFSVA/SVP officially redesignates them asTLFs. Post all income from such units in theVOQ or VAQ cost centers of the lodging fund.See AFMAN 34-214 for computation andreporting. The NAF AO reports assessment datato AFSVA/SVFF before the 15th work day of thefollowing month.

B1002 E m p l o y e e C e n s u s D a t a(Quarterly). The NAF AO reports employeetotals as of the last pay period of the quarter.Include foreign national information that is notincluded in the US employees’ payroll system.See AFM 176-378 for format.

B1003 APF Support to Morale, Welfare,and Recreation (MWR) Activities, RCS:HAF-MWR(Q)7503. Financial Services Office(FSO) personnel prepare and submit this reportaccording to AFR 177-101. The RMFC reviewsthe data for accuracy and validates the report.Include a footnote showing the amount of APFexpenditures to cost centers supported by theNAFI in the quarterly financial statements.

B1004 Special Morale and WelfareExpenditure Report. The NAF AO prepares theSM&W Expenditure Report for each quarteraccording to AFI 34-201. The NAF AOreconciles the SM&W report to cost center "Q" onthe MWRF financial statement.

B1005 Nonappropriated Fund Cash

Management and Investment Program (CMIP)Report, RCS: HAF-DPM(D)7505. For reportingCMIP transactions, follow guidance in AFMAN34-215.

B1006 Nonappropriated Fund FinancialStatement, RCS: HAF-DPM(Q)7407. See AFMAN34-214 for the format of the financial statementfor all NAFIs.

A. The financial statementconsists of four basic elements:

B. Balance Sheet. The NAF AOprepares a report of assets, liabilities, and fundequity (see AFMAN 34-214).

C. Income and Expense (I&E)Statement. The NAF AO prepares aconsolidated statement of income and expensesfor each NAFI and supports the consolidatedstatement with individual cost center reports.Use the same format for the consolidatedstatement and the individual cost center reports(see AFMAN 34-214). Report the amount ofappropriated fund support provided for eachNAFI on the quarterly consolidated statement.

D. Statement of Cash Flows(SCF). The RMFC or designee prepares thisstatement on a quarterly and annual basis.Prepare it either manually or by using anautomated program.

E. Support ing Schedules .AFSVA/SVF, MAJCOM, and local managementmay require supporting schedules to thefinancial statements. As a minimum, the NAFAO prepares the following to support financialstatements:

1. Schedule of agedaccounts receivable.

2. A copy of AF Form 1736,

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NAF Cash Management and InvestmentProgram Account Verification, to support thequarterly financial statement.

F. S p e c i a l I n s t r u c t i o n s ,Frequency, and Distribution. See AFMAN 34-214 for special reporting instructions for unitfunds, subordinate commands, MAJCOMs, BRFs,and CWFs.

G. NAF AOs transmit reports toMAJCOMs to arrive by the 15th calendar dayafter the quarter being reported. Each MAJCOMaccumulates the data and submits reports toAFSVA/SVQ to arrive NLT the 20th of themonth after the end of each fiscal quarter. (SeeAFMAN 34-214 for format for submission,MAJCOM submission and method ofsubmission).

B1007 Quarterly Prompt Payment Report,RCS:DD-COMP(Q)1619. NAF AO’s preparequarterly Prompt Payment Reports (see AFMAN34-214 for format). Submit the report toAFSVA/SVF by the 10th calendar day followingthe end of each quarter. Round all amounts tothe nearest dollar. AFSVA/SVF prepares andsubmits the quarterly report to SAF/FMPB.

B1008 Annual Prompt Payment Report,RCS: DD-COMP(A)1607. AFSVA/SVF preparesand submits the annual prompt payment reportto SAF/FMPB.

B1009 International Balance of PaymentsTransactions, RCS: DD-COMP(Q)743 (AF). Thisreport applies to all Air Force NAF supportedactivities having transactions entering theinternational balance of payments (IBP) (whetherabroad or in the US, its possessions, Puerto Rico,and Panama Canal Zone) except unit funds andthose NAFIs whose quarterly purchases do notexceed $50,000. AFSVA/SVF prepares andsubmits the quarterly report for applicable bases.Follow guidance in AFMAN 34-214.

B1010 Tax Reports. See AFMAN 34-214for reporting quarterly payroll tax returns. UseIRS Form 1096, Annual Summary andTransmittal of US Information Return, IRS Form1099-MISC, Statement for Recipients of

Miscellaneous Income (entertainers andpersonnel service contracts), and TD Form W-2G,Statement for Certain Gambling Winnings(bingo). See AFIs 34-201 and 34-202, AFM 176-378 (for reporting tips) and NCR 9300 Users’Guide for procedures in assembling andreporting information.

B1011 Certif ication of FinancialStatements. Quarterly, the custodian certifies thefinancial statements for all NAFIs by signing thefollowing certification, "I certify that theinformation used for preparation of and thebalances in this statement are true and correct tothe best of my knowledge." This certificationincludes all elements of the financial statementas defined in AFMAN 34-214. Forward thecertification to AFSVA/SVF, through yourMAJCOM, to arrive not later than 45 daysfollowing the end of the quarter.

B1012 Certification of Cash Managementand Investment Program (CMIP) Accounts.Quarterly, the custodian certifies the accuracy ofthe CMIP account verification on AF Form 1736,CMIP Account Verification, and forwards it toAFSVA/SVF through MAJCOM/SVF to arriveNLT 45 days after the end of the quarter.Submit a certification statement on AF Form1736. Use the statement described in paragraph12.11. Include a separate AF Form 1736 for eachaccount and NAFI, i.e., cash, severance, and cashin bank savings.

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CHAPTER 11

DEPOSITS, CHECK WRITING AND CONTROL OF CHECK STOCK

B1101 Deposit Slips. The NAF AOreceives the numbered deposit slips (validatedand unvalidated) for CMIP processing. If theNAF AO receives an unvalidated deposit slip,suspense it until the bank sends a validatedcopy. The NAF AO should receive the validateddeposit slip within 3 days after the day ofbusiness. Immediately notify the office managerof any variances between the suspended depositslip and the validated deposit slip whenreceived. If the NAF AO finds a difference inthe amount actually deposited, process a depositadjustment to the general ledger and CMIP.

B1102 Bank Fees and Charges. The NAFAO posts bank fees and charges to the NAFI’sadministrative cost center. Include those itemsthat are not identified to a patron. This includesfees for deposit bags, keys or deposit slips andre-presented check fees absorbed by the NAFI(does not include return check service charge).It also includes the fee paid for armored carservice.

B1103 Check Writing Function.

A. Check Number Control Log.The NAF AO maintains a log (either manual orautomated) of all checks (written and voided)and related information for general, payroll,limited payee checks.

B. Check Writing. The NAF AOreports checks written to AFSVA/SVFB throughCMIP transmission. Under CMIP, the NAF AOprepares all checks except payroll from a singlegeneral check stock. The individual responsiblefor check writing (check writer):

1. Uses checks in numericalsequence.

2. Writes checks forindividual NAFIs and identifies the NAFI oneach check. Include the NAF ID on each check

stub (except payroll).

3. Spells out the dollaramount for checks typed manually or processesthem through a check protector. They shouldnot contain typing errors or strikeouts.

C. General Checks. The NAFAO normally writes checks on a weekly orbi-weekly basis to ensure compliance with thePrompt Payment Act requirements. The NCR9300 automatic check generation programnormally generates these checks. However, theNAF AO may prepare handwritten checks forout-of-cycle payments.

D. Foreign Currency Checks.Overseas locations use foreign currency andlimited payee checks. The NAF AO uses aforeign currency checking account, established ina military banking facility in the overseas area,to satisfy local requirements for foreign currencyand to make disbursements that require thismedium of exchange. Use limited payee checks(LP) for change funds and accommodation sales(see AFI 34-202).

E. Distribution of Checks andPaid Documents. The check writer returns thesigned checks with supporting documents to theaccounts payable technician for distribution.AFMAN 34-214 contains mail, retention, anddistribution instructions.

B1104 Control of Blank Check Stock. TheNAF AO stores blank checks in a lockedcontainer or safe. Use AF Form 1249,Check/Bond Control Record, to record receipt,issue, return, balance on hand, and spoiled orvoided checks. Maintain a separate checkcontrol record for each type of check. NAFIs notunder CMIP obtain check stock from normalcommercial sources.

B1105 Destruction of Blank Check Stocks.

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When a blank stock of checks needs to bedestroyed, two individuals independent of thecheck writing function witness the destruction(see AFMAN 34-214). The NAF AO notifiesAFSVA/SVFB of the destruction according toAFMAN 34-214.

B-24


CHAPTER 12

MISCELLANEOUS TRANSACTIONS

B1201 Aero Club Liability InsuranceExpense. The NAF AO computes liabilityinsurance premiums for Aero Club aircraft basedon the number of flying hours per aircraft.Compute the monthly expense by using the totalflying hours reported on the status of Aero ClubAircraft and Operations Report, RCS:HAF-DPM(Q)7211. See AFMAN 34-214.

B1202 Aero Club Hull Insurance. TheNAF AO computes hull insurance based on thedeclared value of each aircraft as reported on thequarterly RCS: HAF-DPM(Q)7211 report. SeeAFMAN 34-214.

B1203 Workers’ Compensation (WC).The Payroll Retrieval Interface to General Ledger(PRIGL) program computes the accrued WCexpense and produces the journal entries used toupdate the financial records. The PRIGLcomputes premiums based on US civilian grosspayroll. The NAF AO posts the premiumexpense by the end of each accounting period toeach applicable cost center. See AFMAN 34-214.

B1204 Unemployment Compensation(UC). The PRIGL computes the accrued UCexpense and produces the journal entries used toupdate the financial records. The PRIGLprogram computes premiums base on US civilianpayroll. The NAF AO posts the premiumexpense by pay period to each applicable costcenter where personnel are assigned. SeeAFMAN 34-214.

B1205 Asset and Liability Insurance. TheNAF AO records premiums at the end of eachaccounting period based on balances from thequarterly 7407 report. Use the fundadministration cost center for each NAFI.

A. Asset Computation. The NAFAO computes asset premium payments based onthe book value of assessable assets.

B. Liability Computation. TheNAF AO computes liability premium paymentsbased on the total gross income for eachapplicable NAFI.

B1206 Group Life Accidental Death andDismemberment and Comprehensive MedicalExpense Insurance Program. The PRIGLcomputes the employer’s share of the InsuranceProgram. The NAF AO posts this expense eachpay period to the respective cost center wherepersonnel are assigned. Transfer the totalemployee and employer share of groupinsurance to the MWR fund. The NAF AOmakes payment from the MWR fund to the AirForce Insurance Fund (AFIF) through CMIP.

B1207 Retirement Program. The PRIGLcomputes the employee’s contribution ofretirement and transfers it to the MWR fund.The NAF AO makes payment from the MWRfund to the Air Force Retirement Fund (AFRF)through CMIP.

B1208 Reimbursements from MAJCOMs.When MAJCOMs authorize reimbursements, theNAF AO does not net the reimbursement intothe expense account. Record the expense in fullon the NAFIs books. The MAJCOM does notreimburse for more than 100 percent of theactual cost.

B1209 Procedures for Aero ClubAccruals. The NAF AO accrues the anticipatedengine overhaul or replacement cost monthly.NAF AOs should also establish accruals in AeroClubs for any other planned major maintenancesuch as repainting aircraft. To account foraccrued maintenance, the NAF AO keeps twoseparate subsidiary ledgers, one for engineoverhaul and one for other planned maintenance.See AFMAN 34-214.

B1210 Promotions. An activity uses theentertainment and promotional expense GLACs

B-25


to separate the expense of such programs. Usethese accounts for programs or events held tofurther the growth or development of thatactivity. The NAF AO posts expenses for goodsand or supplies only when an activityspecifically advertises the items in connectionwith a promotion, or the item is used during afree program. Transfer labor expenses only if anactivity specifically schedules labor that is usedin conjunction with the promotion or giveaway.Post the cost of the entertainment or promotionto the activity receiving the benefit. See AFMAN34-214 for additional details.

B1211 Severance Pay. The NAF AOaccrues obligations for severance pay dueemployees according to AFMAN 34-214. Accrueseverance for NAF foreign national employeesduring the period in which the entitlement isearned, whether or not the amount is currentlypayable. For other NAF employees, severanceaccrual begins when the NAFI knows it willincur such a liability in the future (for example,when announced for closure or majorrealignment). Set aside funds in the severancebenefits investment program to pay for futureliabilities. Contact HQ AFSVA/SVF to establisha severance benefits investment account.

B-26


ATTACHMENT B.1

ABBREVIATIONS GLOSSARY

AAFCWF Army and Air Force Civilian Welfare FundAAFES Army and Air Force Exchange ServiceAFAA Air Force Audit AgencyAFB Air Force BaseAFFMF Air Force Financial Management FundAFI Air Force InstructionAFIF Air Force Insurance FundAFM Air Force ManualAFMWRAB Air Force Morale, Welfare, and Recreation Advisory BoardAFNAFPO Air Force Nonappropriated Fund Purchasing OfficeAFPD Air Force Policy DirectiveAFROTC Air Force Reserve Officer Training CorpsAFSVA Air Force Services AgencyANG Air National GuardAPF Appropriated FundsASD Office of the Assistant Secretary of DefenseA/R accounts receivableBOD Board of DirectorsBPA blanket purchase agreementBRF base restaurant fundsCBPO Consolidated Base Personnel OfficeCC cost center (accounting term)CCC cost center codeCCCR consolidated cost center reportCCFP child care food programCLF command lodging fundCMIP cash management and investment programCONUS Continental USCT cash transferCWF civilian welfare fundDOB date-of-businessDOD department of defenseDODI DOD instructionDRMO defense reutilization and marketing officeEDC electronic data captureEOM end-of-monthFC foreign currencyFM financial managerFMFIA Federal Managers’ Financial Integrity ActFM&P Force Management and PersonnelFOA field operating agencyFY fiscal yearGAAP generally accepted accounting principlesGAO general accounting officeGLAC general ledger account codeGSA general services administration

B-27


IAW in accordance withIBP international balance of paymentsICR internal control reviewICR individual cashier’s reportI&E income and expenseIG inspector generalIPO interfund purchase orderIUF isolated unit fundsJER Joint Ethics RegulationJV journal voucherLOF life-of-the-fundMAJCOM major commandMBF military banking facilityMPO military pay orderMWR morale, welfare, and recreationMWRF MWR fundNAF nonappropriated fundNAFFA nonappropriated fund financial analystNAFI nonappropriated fund instrumentalityNAFSAMS nonappropriated fund standard accounting

management systemNAF AO NAF accounting officeNLT not later thanNRB NAF requirements budgetNTE not to exceedOI operating instructionOPM Office of Personnel ManagementPCS permanent change of stationPDO Publications Distribution OfficePL Public LawPO purchase orderPOC point of contactPOS point of salePRIGL payroll interface to the general ledgerRCS report control symbolRMF resource management flightRMFC resource management flight chiefRRRP resource recovery and recycling programSAV savings accountSCO servicing contracting officeSEV severance accountSM&W special morale and welfareSV ServicesSVF Directorate of Financial Management and ComptrollerTBCC transfer between cost centersTDY temporary dutyTLF temporary lodging facilityTR dollar transferUC unemployment compensationUS United StatesUSAF United States Air Force

B-28


USAFA USAF AcademyUSAFAAA United States Air Force Academy Athletic

AssociationUSAFE USAF EuropeUSDA United States Department of AgricultureVAQ visiting airmen’s quartersVAT value added taxVOQ visiting officers quartersWC workers’ compensation

B-29


ATTACHMENT B.2

TERMS EXPLAINED

B2.1. Accounting Period. An accountingperiod is from the first day of a given monththrough the last day of the same month.

B2.2. Accounting System. The NAFaccounting system is based on commercialaccounting practices modified to meet the needsof the Air Force. The principles underlying thissystem are based on experience, the needs withinthe Air Force NAFI environment, and generallyaccepted accounting principles (GAAP).

B2.3. Accounting Year. The accounting yearis from 1 October of a given year through 30 Sepof the following year.

B2.4. Activity. This term describesoperational organizations within the SVstructure, such as bowling center, officers’ club.It is also used when referring to specificfunctions within each operational organizationsuch as, lanes operation, snack bar, bar, diningroom, slot machines, ticket operations, etc. Donot confuse the operational functions of the"activity" with the accounting term "cost center."

B2.5. Assets. Assets are economic resourcesobtained or controlled by NAFIs as a result ofpast transaction or events. They are classified aseither current or noncurrent items.

B2.6. Balance sheet. The balance sheet showsthe financial position of a NAFI at a point intime. It lists the assets and claims against theNAFI. The balance sheet lists separate columnsfor current period (FY) and prior period data.This report also includes current and acid testratios.

B2.7. Budget Working Committee .Individuals selected by the Services Commanderor Director to review and prioritize items onNAF Requirements budgets.

B2.8. Cash Flow Budget. A formal financial

plan which shows the beginning cash balance,the cash inflows and outflows, and the endingcash balance expected for a period of time. Thepurpose of the cash flow budget is to anticipatechanges in the level of cash. The ANF AOprepares a cash flow budget for each NAFI.

B2.9. Cost Center. Term used to identify theaccounting subdivision of a NAFI. This term isused for accounting purposes and should not beconfused with the operational term "activity." Astandard 2-digit identity code is assigned by AirForce for each cost center.

B2.10. Current Assets. Cash and other assetsthat can be reasonably expected to be convertedto cash or consumed (accounts receivables andinventory) during the next 12 months.

B2.11. Current Liabilities. Debts that shouldbe paid within the next 12 months; includesaccounts payable, accrued payroll, taxes, andcurrent portion of loans payable.

B2.12. Custodian. The Resource ManagementFlight Chief (RMFC) is the primary custodian forall NAFIs supporting a base with the exceptionof the base restaurant and civilian welfare funds,exchanges, and in some instances NAFIs atremote or isolated units.

B2.13. Depreciation. The method used toexpense the acquisition cost of a fixed asset overthe life expectancy of that asset.

B2.14. Financial Analysis. Analysis is acontinuing process throughout the normal courseof operations, with the manager as the focalpoint. The objective is to spot potentialproblems, identify root causes, and obtainsolutions.

B2.15. Fixed Assets. Tangible items with anindividual cost of $1,000 or more, and with a lifespan of 2 years or more, which do not lose their

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identity through use. Includes items such as,furniture, equipment, tools, machinery, facilities,major repairs and improvements, etc.

B2.16. Fund Equity. Fund equity (net worth)is te excess of total assets over total liabilities.

B2.17. General Ledger. The general ledger isthe core of the NAF accounting system andprovides a detail of all accounting transactionsfor the current period. The system consists ofcontrol accounts for assets, liabilities, equity,income, and expenses.

B2.18. Host MWRF. Provides financialmanagement and accounting services requiredby NAFIs at other locations. The host MWRFcustodian is responsible for financialmanagement assistance and accounting support,and serves as the focal point for fiduciaryaccountability.

B2.19. Income and Expense (Operating)Budget. A formal financial plan which reflectsmonthly and quarterly projected income andexpenses for a fiscal year. It reflects the expectedoutcome of management’s plans and decisions infinancial terms. It shows the revenue andassociated expenses an activity expects togenerate over a given period. This budget givesthe activity manager an estimate of the profit tobe realized from the operation. (For this reason,the I&E budget is sometimes referred to as the"operating" budget.)

B2.20. Liabilities. Liabilities are obligations totransfer assets, provide services, or otherwiseexpense assets to satisfy responsibilities resultingfrom past or current transactions. They areclassified on the financial statements as eithercurrent or noncurrent liabilities.

B2.21. Minimum Cash Balance. Theminimum amount of cash that should be kept incash-in-bank for efficient operations and soundcash management.

B2.22. NAF Requirements Budget. A formal5 year financial plan which shows the estimatedcost and time for buying new equipment,furnishing, renovating facilities, replacing and

repairing fixed assets, buying bulk purchases ofexpendable equipment and buying bulkpurchases of high cost supply items.

B2.23. Small Operations. Those with limitedprograms and gross revenues of less than$36,500 per year. Small operations may notrequire all of the detailed accounting records andprocedures outlined for NAFIs at bases orstations.

B2.24. Statement of Cash Flows. TheStatement of Cash Flows is a formal statement ofcash received and cash paid out for the periodbeing reported. It shows the uses and sources ofcash. It is prepared by NAFI.

B2.25. Unprogrammed NAF Expenditures.Expenditures for costly capital assets (equipmentand facilities) which are not included in the NRBof the NAFI (called "unprogrammed"). Thesecan cause serious cash flow problems.

B2.26. In Use Inventory. In use inventoryconsists of merchandise maintained by operatingactivities for resale or consumption in salesoutlets such as bars, pro shops, restaurants, andsnack bars.

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ATTACHMENT B.3

PRESCRIBED FORMS

AF Form 1708 NAF Dishonored Check Control Log

AF Form 1735 NAF Interfund Purchase Order

AF Form 1736 NAF Cash Management and Investment Program Account Verification

AF Form 1804 NAF Interfund Dollar Transfer

AF Form 1875 NAF Individual Cashier’s Report

AF Form 1876 NAF Consolidated Cost Center Report

AF Form 2533 NAF Transfer Between Cost Centers

AF Form 2534 NAF Property Disposal Transfer Receipt

AF Form 2539 NAF Disbursement Request

AF Form 2541 NAF Journal Voucher

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