Imprest
Funds
Regulations and Guidance
Imprest Funds Policy Directive
NOTE:
The Imprest Policy Directive that follows
(in HTML and PDF versions) is shown as it originally was published. Since
its release, FMS has revised the TFM as promised in the second paragraph
of the SUMMARY section to create a new Treasury Policy
Directive covering Third Party Drafts.
TFM links
in this Web site take the reader to the new Treasury Policy Directive
on the use of Third Party Drafts: TFM Volume I, Part 4, Section 3000
(I TFM 4-3000), Third-Party Draft Procedures for Imprest Fund
Disbursing Activities.
SUMMARY
This Policy Directive requires
that federal agencies eliminate agency imprest funds, except for waived
payments described below, by October 1, 2001.
The Financial Management Service
(FMS) is eliminating Treasury Financial
Manual (TFM), Volume I, Part 4, Section 3000, Imprest Fund Cash Held
at Personal Risk by Disbursing Officers and Cashiers, and is replacing
that TFM chapter with this Policy Directive. Section 3040.70 of the TFM
covering Third Party Drafts will remain in effect until publication of
a Treasury Policy Directive on the use of Third Party Drafts and other
draft instruments.
This Policy Directive affects two FMS operating
manuals, the TFM and the Manual of Procedures and Instructions for Cashiers
(Cashier's Manual). The relevant policy sections of the TFM and the Cashier's
Manual have been replaced by this Policy Directive. The operational guidance
contained in the TFM will be merged into the Cashier's Manual.
BACKGROUND
Treasury is requiring agencies
to eliminate agency imprest funds because they are labor intensive, require
relatively more internal controls than noncash payment mechanisms, and
the government does not earn interest on money held in these accounts.
The National Performance Review,
Report on the Elimination of Imprest Funds in the federal government
Through the Use of Electronic Commerce (hereinafter "Report") concluded
that due to today's electronic technology advances, most imprest funds
in the federal government could be closed. Further, the Report stated
that doing so would save the government millions of dollars in operating
costs by increasing operational efficiency and improving government service.
The Report indicated that it is feasible and appropriate for government
agencies to replace their imprest funds with a form of electronic
funds transfer (EFT) or type of third party paper.
The Debt
Collection Improvement Act of 1996 (DCIA) requires most federal payments
to be made electronically as of January 2, 1999, except for tax refunds,
subject to the authority of the Secretary of the Treasury to grant waivers.
On September 25, 1998, Treasury published a
final rule (31 CFR 208) implementing the requirements of the
DCIA. The EFT rule established the circumstances under which waivers from
EFT are available and set forth the responsibilities of federal agencies
and payment recipients under the regulation, among other requirements.
RESEARCH and ANALYSIS
FMS surveyed the federal agencies
and bureaus that make the majority of federal payments on their use of
imprest funds. In addition, FMS held several meetings of the EFT
interagency policy workgroup to discuss broad agency imprest fund issues,
and relied on the final recommendations of the imprest fund subgroup of
the EFT workgroup.
The research indicated that
many agencies continue to use imprest funds to make a variety of payments
to all classes of payment recipients, such as employees, vendors, beneficiaries,
and other individual payment recipients. Agencies reported that they also
use imprest funds to satisfy mission-specific payment needs where payment
by EFT or check is not possible. For example, mission-specific payments
include emergency and payments to agency beneficiaries, and payments to
individuals to whom the agency must provide untraceable payments--usually
for national security or law enforcement actions. Agencies reported that
small dollar payments are another area of significant imprest fund use.
In contrast, several agencies with
diverse missions have eliminated or nearly eliminated their use of imprest
funds. For example, a large benefit agency has eliminated most of its
imprest funds by using a combination of EFT payments and third party draft
payments. This agency uses third party drafts to make most emergency and
administrative payments that cannot be effectively made by EFT. The agency
has guaranteed the acceptance of its third party drafts by making agreements
with financial institutions near each of the agency's offices. Another
agency has nearly eliminated its imprest funds by using a combination
of EFT and convenience checks.
SECTION-BY-SECTION ANALYSIS
The availability of waivers,
described in (a) - (f) below, should be determined by the agency responsible
for making the payment. There is no requirement in the Policy Directive
that Treasury approve the applicability of such waivers.
For all payments waived from
the requirement that imprest funds not be used, EFT
is the preferred payment mechanism. Agencies using cash for these payments
should continue seeking electronic or other cost-effective means to make
their payments.
(a) A payment by EFT is
waived in accordance with the provisions of 31 CFR 208, Management of Federal Agency
Disbursements, at §208.4 Waivers; and
Imprest funds may only be
used when the EFT requirement has been waived. Therefore, an imprest
fund payment must meet the requirement of (a) and one other waiver
described in (b) through (f).
(b) Payments involve national
security interests, military operations, or national disasters;
Several Department of Justice
(Justice) bureaus commented that without this exemption, agency activities
in these areas could be threatened or compromised.
(c) Payments are made in
furtherance of a law enforcement action;
In addition to Justice bureaus
and the Environmental Protection Agency, the EFT workgroup and the imprest
fund subgroup commented that an exemption should be made to the imprest
fund policy for payments made in furtherance of a law enforcement. Specifically,
this exemption is provided for payment circumstances in which an agency
must avoid leaving any trail that may jeopardize a particular operation
or result in endangering the safety of an individual.
(d) The amount owed is less
than $25;
The EFT workgroup and the
imprest fund subgroup recommended that the Policy Directive accommodate
small dollar cash payments. Treasury agrees that occasionally agencies
will need to make small cash payments to individuals with whom an agency
has a mission-related relationship and to vendors that do not accept
payment by EFT or check. Agencies may not split a payment greater than
$25 into two or more smaller payments in order to meet this exemption.
(e) The political, financial,
or communications infrastructure of a foreign country does not support
payment by a noncash mechanism; or
The Departments of Justice
and State commented that they are often required to do business in foreign
countries that do not have the political, financial, or communications
infrastructure to support any other payment mechanism other than cash;
(f) Payments are made in
emergencies, or in mission-critical circumstances, that are of such an
unusual and compelling urgency that the government would otherwise be
seriously injured, unless payment is made by cash;
The majority of agencies,
the EFT workgroup, and the imprest fund subgroup agreed that agencies
should have some discretion as to whether emergency or mission-critical
payments should be made by cash if noncash methods where not feasible
or possible.
This exemption is intended
to provide some flexibility to agencies in determining conditions under
which a form of payment other than cash would "seriously injure" the
government. FMS intends for agencies to invoke the "serious injury"
exemption only under those circumstances in which the agency has determined
would negatively impact individual agency program objectives.
All federal agencies must
eliminate agency imprest funds by October 1, 2001, except where provided
under this directive.
AUTHORITY
Statutes: 31
U.S.C. §§ 3321-3333
Regulations:
31 CFR 208, Management of Federal
Agency Disbursements; Final Rule
SCOPE
This Policy Directive applies
to all federal payments and, except where waived below, requires such
payments to be made using noncash methods, preferably electronic funds transfer.
DEFINITION
Imprest Fund:
A fixed- or petty-cash fund in the form of currency or coin that has been
advanced as Funds Held Outside of Treasury. Federal agencies are required
to report their imprest funds in General Ledger Account 1120 - Imprest
Funds on their annual financial statements.
WAIVERS
Imprest funds may only be used
when:
(a) A payment by EFT is waived
in accordance with the provisions of 31 CFR 208, Management of Federal
Agency Disbursements, at §208.4 Waivers, and
(b) Payments involve national
security interests, military operations, or national disasters;
(c) Payments are made in furtherance
of a law enforcement action;
(d) The amount owed is less
than $25;
(e) The political, financial,
or communications infrastructure of a foreign country does not support
payment by a noncash mechanism; or
(f) Payments are made in emergencies,
or in mission-critical circumstances, that are of such an unusual and
compelling urgency that the government would otherwise be seriously injured,
unless payment is made by cash.
SIGNATURE
Signed by Commissioner
Richard L. Gregg
November 9, 1999
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