An obligation is a financial or related transaction that creates a legal liability
to pay. In most cases, the actual disbursement of funds occurs after the obligation
is made. An obligation can be made in a variety of ways, such as placing an order,
awarding a contract, receiving a service, etc. which requires payment during a given
period or in some future period.
Obligations must be based on a bona fide need for goods or services that exist within
the Federal fiscal year (October 1 through September 30) and must be made no later
than six months after the close of that fiscal year (March 30). The intent of this
policy is to allow the DDS sufficient time to incur the fiscal year obligation through
State purchasing procedures when funding is authorized late in the year.
Obligations represent liabilities against obligational authority and include payments
for goods or services received and commitments to pay for goods or services ordered.
Obligations result from:
Employing individuals (compensation of personnel for time devoted to SSA disability
Issuing travel authorizations (travel expenses incurred specifically for time devoted
to SSA disability programs);
Ordering services (e.g., consultative examinations, contractual services);
Ordering equipment and making other approved capital expenditures.
Valid obligations should be supported by documents/records that describe the nature
of the obligations and support the amounts recorded.