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TFM Volume I Table of Contents
This chapter prescribes third-party draft procedures for imprest fund disbursing activities performed by the Department of the Treasury (Treasury) and agencies.
On November 9, 1999, Treasury published the Imprest Fund Policy Directive (Policy Directive) on the imprest fund website at www.fms.treas.gov/imprest. This Policy Directive replaces the previous imprest fund policy contained in this chapter. It also requires that Federal agencies eliminate imprest funds by October 1, 2001. After October 1, 2001, agencies may make Federal payments from an imprest fund only if they meet the waiver criteria described in the Policy Directive. Agencies may:
The updated Manual of Procedures and Instructions for Cashiers (Cashier's Manual) includes the operational guidance previously contained in this chapter. See the updated Cashier's Manual at www.fms.treas.gov/imprest.
The procedures prescribed herein for third-party drafts remain in effect until Treasury publishes a policy directive on the use of third-party drafts and other draft instruments.
Title 31 U.S.C. 3321 (formerly Executive Order 6166) and 3322 authorize the chief disbursing officer, Treasury, and other officers and employees to whom disbursing functions have been delegated to perform certain disbursing functions.
Third-party drafts are acceptable alternative payment mechanisms for imprest fund transactions where payment by electronic funds transfer (EFT) has been waived under Management of Federal Agency Disbursements; Final Rule (EFT rule), 31 Code of Federal Regulations (CFR) 208. See the website at www.fms.treas.gov/eft for the EFT rule. The third-party draft system offers agencies improved internal management controls. It also provides an effective cash management method for reducing the outstanding imprest fund balances currently required by agencies.
Treasury encourages agencies to investigate the cash management and internal control benefits provided by a third-party draft system to determine its applicability and cost effectiveness within the particular agency. Each agency must obtain a contractor to provide the service.
Treasury does not require that agencies submit Optional Form (OF) 211: Request for and Designation of Cashier, or a substitute agency form, to change or establish an imprest fund because Government funds are not being disbursed. Therefore, any agency-approved official can issue third-party drafts. Also, unlike true imprest funds, the issuing official is not personally liable but is administratively accountable. A Federal agency using third-party drafts must issue procedures to:
Each agency establishes the maximum amount for which it will issue third-party drafts. However, the face value of each draft must not exceed $10,000, and this limitation must be printed on the face of the draft. An agency requiring a draft amount limit higher than $10,000 must request a waiver. It must send a request for waiver detailing the benefits and savings to the Director, Cash Management Policy and Planning Division, for review and approval (see the Contacts page). Third-party drafts issued for routine imprest fund payments remain at the current $2,500 limit.
Agencies reimburse contractors for cleared payment instruments based on the payment issued data. Per the EFT rule, unless waived in accordance with 31 CFR 208.4 guidelines, the required method of payment is EFT.
Agencies may not place funds on deposit with a contractor for "drawdown" reimbursement. If there is a discrepancy between the cleared payment instrument and the payment issued data, the agency adjusts the questioned amount against a subsequent payment to the contractor, if both agree an error has occurred. The contractor's technical proposal must provide procedures for these adjustments, and the agency must establish procedures for handling any such disagreements.
Under the contract, the agency reimburses the contractor for cleared payment instruments paid from the contractor's funds. The specific terms of the contract govern these payments.
Agencies may not redeem third-party drafts for cash. Also, agencies must issue third-party drafts for the exact payment amount.
Agencies must mail third-party drafts, as long as internal controls are in place, to avoid duplicate payments to vendors. They are responsible for all administrative costs associated with utilizing the third-party drafts.
The contractor must agree to pay payees and amounts as instructed by the agency. The payment instruments issued under agreed-upon procedures (proper authorizations provided to the contractor) constitute such instructions.
The agency reimburses the contractor in full for all properly payable instruments the contractor paid. A properly payable instrument:
The agency is liable only for the original amount of any altered payment instrument.
The agency will not honor a payment instrument with a forged or unauthorized indorsement. Treasury regulations under 31 CFR 240, Indorsement and Payment of Checks Drawn on the United States Treasury, govern proper indorsements. If a forged or unauthorized indorsement is discovered after the agency pays the contractor, the contractor refunds the amount of the payment instrument. The contractor must make the refund before any charge back to the cashing financial institution and without penalty interest or charges to the agency.
All payment instruments must bear a legend stating the payee agrees to refund the agency any erroneous or improper payment upon demand.
Under 31 U.S.C. 3528, agency certifying officers must ensure that all reimbursements to the contractor are proper. The agency must establish sufficient internal controls to permit the certifying officer to make prompt reimbursements, while exercising reasonable diligence in reviewing the contractor's request for reimbursement.
Cash Management Policy and Planning Division
Financial Management Service
Department of the Treasury
Liberty Center Building, Room 420
401 14th Street, SW.
Washington, DC 20227
Telephone: 202-874-6590
1. Purpose
This transmittal letter releases I TFM 4-3000: Third-Party Draft Procedures for Imprest Fund Disbursing Activities. This chapter prescribes third-party draft procedures for imprest fund disbursing activities performed by the Department of the Treasury and agencies.
2. Page Changes
Remove
Table of Contents for Volume I
Table of Contents for Part 4
I TFM 4-3000
Insert
Table of Contents for Volume I
Table of Contents for Part 4
I TFM 4-3000
3. Effective Date
Upon receipt.
4. Inquiries
Direct questions concerning this transmittal letter to:
Cash Management Policy and Planning Division
Financial Management Service
Department of the Treasury
Liberty Center Building, Room 420
401 14th Street, SW.
Washington, DC 20227
Telephone: 202-874-6590
Date: August 3, 2000
Richard L. Gregg
Commissioner
