Final answer:
Deobligating funds in the financial system involves releasing allocated funds that are no longer needed. It is commonly done when a project is canceled or completed under budget.
Step-by-step explanation:
Deobligating funds in the financial system refers to the process of releasing funds that were previously allocated for a specific purpose but are no longer needed. This is commonly done when a project is canceled or completed under budget.
An example of deobligating funds would be if a government agency allocated funds for the construction of a new school but later decided to cancel the project. The agency would deobligate any unspent funds and make them available for other purposes.
To cancel the obligation of funds, a MOV (Management Override Voucher) response is used. This is a document that authorizes the deobligation of funds and ensures proper accounting for the cancellation.