What is deobligation and when would you use it?

• A. Reducing an obligation not needed; frees funds for other uses.
• B. Increasing an obligation; expands scope.
• C. Automatically rolling over funds to next year.
• D. Delaying disbursement.

Answer: (A)

Deobligation is the act of reducing an obligation that was previously recorded, freeing the unused funds for other uses. You would use it when the project or item no longer needs the full amount that was obligated, such as when a project is canceled, the scope is reduced, or actual spending falls short. The remaining funds become available again for reprogramming or other obligations.

This is different from increasing an obligation (which commits more funds), automatically rolling over funds to the next year (carryover), or delaying disbursement (postponing payments rather than reducing the committed amount). For example, if $2 million was obligated for a project but only $1.25 million is needed, the $750,000 can be deobligated and reallocated.