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Department of the Interior

Effective Date: 12/10/84

Series: Financial Management

Part 339: Cash Advances Under Federal Programs

Chapter 2: Administration of Cash Advances

Originating Office: Office of Financial Management

2.1 LOC Method. Advances will be made by the LOC method if a bureau has or expects to have a continuing relationship with a recipient for at least one year and the annual advances involved aggregate to at least $120,000.

A. Use of LOC. The use of LOC will be covered by a clause in the grant, contract, or other agreement. In such clause the recipient commits itself to (1) initiating cash drawdowns only when actually needed for its disbursements, (2) timely reporting of cash disbursements and balances, and (3) the imposition of the same standards of timing and amount upon secondary recipients, including the furnishing of reports of cash disbursements and balances, with the understanding that failure to adhere to these provisions may cause the unobligated portion of the LOC to be suspended or revoked.

B. Consolidation of LOC. Each bureau will work toward consolidating its LOC authorizations to each recipient. The bureau will combine all advance funding to the same recipient under one LOC. To achieve this requirement, all advance funding will be consolidated including that which ordinarily would not qualify under the criteria established for LOC method.

C. Request for Payment. Ordinarily, requests by the recipient for payment against LOC should not be made more frequently than daily or for amounts less than $5,000, and in no case more than $5,000,000 unless so stated in the LOC.

2.2 Direct Treasury Check Method. Advances will be made by direct Treasury check when annual advances are less than $120,000, or when annual advances are more than $120,000 and a continuing relationship for at least one year is not expected.

A. Use of Treasury Check. Advances will be made by Treasury check in amounts necessary to meet immediate disbursement needs of the recipients.

B. Issuance of Treasury Check. Advances will be scheduled so that funds are available to the recipients only immediately prior to their disbursements. For example, if the recipient disburses cash on a monthly, biweekly, or any other regular cycle, and the amounts involved so warrant, the issuance of Treasury checks will be similarly timed.

2.3 Monitoring of Advances. Monitoring of advances enables the bureau to maintain effective control and accountability of funds. Bureaus will:

A. Ensure that cash advanced to recipients will be limited to minimum amounts necessary for immediate disbursement needs;

B. Develop procedures that control all funds advanced;

C. Maintain records of advances;

D. Establish and maintain procedures that will identify excessive cash;

E. Ensure that recipients develop procedures that will provide control over advances to secondary recipients; and

F. Perform reviews, at least quarterly, of each recipient=s use of funds advanced (see I TFRM 6-2080.20). Guidelines for these reviews will be prescribed by PFM.

2.4 Excessive Cash. When it is determined cash is maintained in excess of immediate needs, bureaus will ensure that the excess balances of cash are promptly returned. Cash that is erroneously drawn in excess of immediate disbursement needs will be promptly refunded to the bureaus, unless the excess funds involved (a) will be disbursed by the recipient within seven days, or (b) are less than $10,000 and will be disbursed within 30 calendar days. These criteria will not be construed as approval for a recipient to maintain a seven-day supply of funds or a 30-day supply of funds if less than $10,000, but are applicable only to excessive amounts of funds which were erroneously drawn. In the event the recipient delays prompt repayment, bureaus will consider suspending further advances until collection action has been completed.

2.5 Interest Earned. Any interest income earned by a recipient will be promptly refunded unless specifically prohibited by law. A State, instrumentalities of a State, and tribal organizations are not accountable for interest earned on grant money pending its disbursements for program purposes. However, bureaus will ensure that advances to these recipients are limited to the minimum amounts needed, and that any excess balances of cash are promptly returned to Treasury (see 339 DM 1.3 and 2.4). Provision should be made in financial reports for recipients to report interest earned. Audit reports will also be carefully reviewed to determine if a recipient has earned any unreported interest income. Prompt action will be taken to recover any such interest noted. Unless otherwise provided by statute, all interest income recovered will be deposited in receipt account A1435 General Fund Proprietary Interest, not otherwise classified.@ These transactions will be reported on the bureau=s Statement of Transactions reports (see I TFRM 6-2080.30a and 2080.30b).

2.6 Requirements of Recipients.

A. Financial Reports. Bureaus will require that the recipients use, prepare, and submit the prescribed financial reports (see Attachment H of OMB Circular No. A-102 and Attachment G of OMB Circular No. A-110). Bureaus will be the required reports to assist them in monitoring advances (see 339 DM 2.3). The recipients will be required to:

(1) Submit reliable, accurate, and timely financial reports no later than the prescribed due date. When a recipient continually refuses to submit required financial reports by the prescribed due date, bureaus will take appropriate corrective action, such as suspension of advance funding or revoking the LOC; and

(2) Prepare financial reports on an accrual basis. In those instances where the recipient does not normally keep accounting records on an accrual basis, bureaus will not require conversion of its financial system, but the recipient will develop accrual information through an analysis of the documentation on hand.

B. Financial Management Systems. The financial management systems of the recipients will provide for effective control over and accountability for advances (see Attachment G of OMB Circular No. A-102 and Attachment F of OMB Circular No. A-110).

C. Controlling Advances. The recipient will impose the same standards of timing and amount applicable to advances upon secondary recipients.

2.7 Termination of Advance Financing. When a recipient receiving advances has demonstrated an unwillingness or inability to establish procedures that will minimize the time lapsing between advances and the disbursement thereof, bureaus will consider termination of advance financing, unless prohibited by law (see I TFRM 6-2075).

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12/10/84 #3426

Replaces 12/10/84 #2610