Download  

Department of the Interior

Effective Date: 12/10/84

Series: Financial Management

Part 339: Cash Advances Under Federal Programs

Chapter 1: Policies and Procedures

Originating Office: Office of Financial Management

1.1 Purpose. This Part establishes Departmental policies and procedures for the administration of cash advances (advances) made under Federal programs to State and local governments, educational institutions, and any other public or private organizations. These policies and procedures are applicable to all bureaus and offices (bureaus).

1.2 References.

A. Department of the Treasury (Treasury), Department Circular No. 1075 (Fourth Revision) - Withdrawal of Cash from the Treasury for Advances Under Federal Grant and Other Programs. (See 31 CFR 205.)

B. Chapter 2000, Part 6, Treasury Fiscal Requirements Manual (TFRM) Cash Advances Under Federal Grant and Other Programs.

C. Office of Management and Budget (OMB) Circular No. A-102 (Revised), AUniform Requirements for Assistance to State and Local Governments.@

D. OMB Circular No. A-ll0, AGrants and Agreements with Institutions of Higher Education, Hospitals and Other Nonprofit Organizations.@

E. Titles 2 and 7, General Accounting Office (GAO) Policy and Procedures Manual for Guidance of Federal Agencies.

1.3 Policy. Advances to a recipient organization (recipient) will be limited to the minimum amounts needed and will be timed to be in accordance with the actual immediate cash requirements of the recipient in carrying out the purpose of the contract, grant, or other agreement.

1.4 Responsibilities.

A. Department. The Office of Financial Management (PFM), Office of Assistant Secretary - Policy, Budget and Administration (PBA) is responsible for (1) furnishing policy and procedural guidance for implementation of regulatory directives and issuances and (2) providing assistance and guidance to bureaus in the administration of advances. The Office of Inspector General (OIG) is responsible for the review of cash advances made under Federal programs and/or from financial systems, and for the review of procedures and controls of the bureaus to ensure compliance with the requirements set forth in this Part and those prescribed by Treasury, OMB, and GAO.

B. Bureaus. Bureaus are responsible for: (1) ensuring that the amounts of advances made are not excessive; (2) ensuring that the advances are properly accounted for; (3) monitoring advances to ensure that cash is not maintained by recipients in excess of immediate need, and that any excess balances of cash are promptly returned to Treasury; (4) requiring that interest earned by recipients be promptly refunded, unless specifically prohibited by law; (5) making reviews of financial practices of recipients; (6) performing reviews, at least quarterly, of the use of funds advanced; and (7) ensuring that required financial reports prepared by recipients are reliable, accurate, and timely.

1.5 Methods of Providing Advances to Recipients.

A. Letter of Credit (LOC). A LOC is a commitment certified by an authorized official specifying a dollar limit available to a designated payee. The LOC is irrevocable (the equivalent of cash available to a recipient) to the extent the recipient has obligated funds in good faith thereunder, in executing the bureau program in accordance with the grant, contract, or other agreement.

(1) LOC - Regional Disbursing Office (RDO) System. Under this system, the LOC is maintained and serviced by the RDO, and the recipient is authorized to withdraw cash under the LOC directly from a Treasury disbursing center.

(2) LOC - Federal Reserve Bank (FRB) System. Under this system, the LOC is maintained by a FRB or branch and the recipient is authorized to withdraw cash from a FRB or branch.

(3) LOC - Treasury Financial Communications System (TFCS). Under this system, the LOC is maintained by Treasury. The recipient is authorized to withdraw cash, within a guaranteed response time, by an electronic funds transfer from Treasury through its local bank.

(4) LOC - Delayed Drawdown Technique. Under this procedure, the drawdown on LOC is delayed until after the checks issued for program disbursements have been forwarded to the payees.

(5) LOC - Check Paid Technique. Under this procedure, the drawdown on LOC is delayed until checks issued for program disbursements are presented to the recipient=s bank for payment. The bank receives reimbursement from an FBR.

B. Direct Treasury Check Method. Under this method, payment is made directly to a recipient by Treasury check authorized by the responsible officer of the bureau.

1.6 Procedures. Prior to making advances described in 339 DM 1.5, bureaus must have their internal operating procedures and procedures for use of recipients reviewed by PFM and approved by Treasury.

A. Internal Operating Procedures. These procedures should include, as a minimum, provisions for the following:

(1) The correct preparation and distribution of required forms (see I TFRM 6-2045-2050.60c);

(2) The monitoring of the recipient=s cash withdrawals coupled with reviews of the other financial practices to ensure against excessive cash (see I TFRM 6-2080.20 and I TFRM 6-1000, Appendix 1, Section 205.4); and

(3) The implementation of the necessary remedial measures in the event that excessive cash is maintained.

B. Procedures for Use of Recipients. Bureaus must advise the recipients of program requirements for advance financing. These requirements and procedural instructions should cover as a minimum the following:

(1) The selection of a commercial bank for receiving payments, if appropriate;

(2) The correct preparation and distribution of the various prescribed forms; and

(3) The requirement that advances be limited to the minimum amounts necessary for immediate disbursement needs (see 339 DM 1.3).

1.7 Accounting Systems. An adequate accounting system will be maintained by bureaus that will provide for: (a) complete and reliable records of advances and related accounts, (b) effective controls over advances (funds), and (c) production of the necessary financial reports to meet management needs.

*

12/10/84 #3425

Replaces 12/10/84 #2610